How Does Credit Repair Work?

Quick Answer

Credit repair services may offer to dispute information on your credit reports if you’re willing to pay fees and monthly subscription costs. However, there's nothing a credit repair company can do that you can't do on your own for free.

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Credit repair companies may offer to remove negative information from your credit reports. However, their services can be costly, and accurate information on your reports cannot be removed. You have the right to dispute credit report information on your own at no cost.

For those who have poor credit reports and scores, credit repair may be tempting as a way to clear away credit problems. But as you'll see, there are plenty of better ways to rebuild your credit.

What Is a Credit Repair Company?

A credit repair company is a third party, which may also be called a credit repair organization or credit services organization, that attempts to remove inaccurate and unverifiable information from your credit reports in exchange for payment.

Other services a credit repair company may offer include:

  • Credit assessment
  • Credit monitoring
  • Communicating with creditors
  • Identity theft monitoring
  • Credit building tools
  • Educational resources

These companies are for-profit organizations, and their services are marketed as being able to help people improve their credit. However, the Credit Repair Organizations Act (CROA) has strict rules on what credit repair companies can and can't do. More specifically, they cannot:

  • Remove accurate credit report information
  • Advise customers to make false statements to credit reporting agencies
  • Advise customers to change their identification to prevent the credit bureaus from associating them with their credit information
  • Charge fees for services that have not been fully rendered
  • Guarantee that they can remove information from their credit repair customer's credit reports

Additionally, the CROA also requires credit repair companies to notify their customers of the following:

  • They have the right to dispute their own credit report information for free
  • They can sue the credit repair company if they violate CROA
  • That while the credit bureaus must maintain reasonable procedures to maintain the accuracy of credit information, mistakes may occur

How Much Does Credit Repair Cost?

Depending on the type of service you choose, you may pay anywhere from $50 to $150 per month or up to $100 per deleted tradeline from your credit reports:

  • Monthly subscription: A garden-variety subscription service may include a setup fee of up to $200 and a monthly charge ranging from $50 to $150, assessed at the end of the month for services performed for that month. Some may also charge a fee for pulling your credit reports.
  • Pay per delete: With this option, the credit repair company only charges you when an item on your credit report is actually deleted pursuant to their efforts. Costs will vary depending on the item. For example, you may pay $25 per bureau to remove personal information, $50 for a late payment and $100 for a bankruptcy.

Should You Use a Credit Repair Company?

For most people, it likely doesn't make sense to hire a credit repair company to help you dispute inaccurate credit information for a few reasons:

  • The service is costly. While the credit reporting agencies typically resolve disputes within 30 days, it can take several months and hundreds of dollars to get relief through a credit repair company—all for services you can perform on your own for free.
  • It's not guaranteed. Credit repair companies can't remove accurate negative information from your credit reports, even if they suggest they can. Even with a legitimate dispute, they can't guarantee results.
  • You're at risk for scams. Some so-called credit repair services are scams in disguise, making it difficult to know who you can trust.

If you're completely overwhelmed with your credit situation, hiring a company can relieve some of the stress of dealing with creditors and the credit bureaus. But even then, it could make sense to first get a free consultation with a credit counselor who can advise you on how to deal with debt and improve your credit situation.

Learn more >> How to Spot and Avoid Credit Repair Scams

How to Fix Your Credit Yourself for Free

Before you consider working with a credit repair company, here are some steps you can take to repair your credit on your own:

  1. Review your credit reports. If your credit score has dipped and you don't know why, start by reviewing your credit reports for anything that you don't recognize. You can register with Experian for free and get access to your FICO® Score and Experian credit report, and you can request a free weekly credit report from Equifax and TransUnion through
  2. File a dispute with the credit bureaus. While the process can differ slightly for each credit reporting agency, you can generally submit a dispute of inaccurate information online, by phone or via mail. You'll typically need to verify your identity and provide your reason and supporting documentation in your request for an investigation.
  3. Wait for a resolution. Credit bureaus typically resolve disputes within 30 to 45 days and will notify you of a decision once the process has been completed. If the negative item is confirmed to be inaccurate or unverifiable, the bureaus may correct, update or delete the information. If the negative information is verified as accurate, it'll remain on your reports.
  4. Take other steps to improve credit. If your credit needs some work due to accurate negative information, you can work to improve your credit score by paying all your bills on time (including getting caught up on past-due payments), paying down credit card balances and avoiding unnecessary credit applications, among other things.

Learn more >> How to Rebuild Your Credit

The Bottom Line

Reputable credit repair companies can offer legitimate credit services, including disputing inaccurate credit report information, credit monitoring and educational resources.

However, their services can be expensive, especially if it takes several months to accomplish your objectives. What's more, you can do anything that a credit repair organization can do free of charge.

Before you consider working with a credit repair company, learn about how to understand your credit report and which steps you can take to fix your credit on your own.