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Negative information that appears on your credit report, such as a late payment or collection account, will typically remain on your report for seven to 10 years. That may seem like a long time, especially when negative information can hurt your chances of qualifying for a loan or credit card. But paying a third-party credit repair company to remove negative information earlier can cost hundreds or even thousands of dollars—and won't take anything off of your report that is accurate.
On top of that, credit repair companies have no more power than you do to remove information from your credit file—and doing it yourself will cost nothing.
Can You Pay to Have Your Credit Fixed?
Consumers have the right to challenge credit information they believe is inaccurate. This process is, and has always been, completely free.
Credit repair, alternatively, is where someone pays a third-party company to attempt to get negative information removed from credit reports. And while it is legal to hire a credit repair company to dispute credit information, paying for this service doesn't mean the information will be removed. In fact, paying a fee will never lead to negative information being removed from your credit reports if it is accurate.
How Much Do Credit Repair Companies Charge?
A credit repair organization is any for-profit company that sells you a service designed to improve your credit reports or credit scores, according to the Credit Repair Organizations Act (CROA). How these companies get payment for their services varies.
Credit repair companies generally receive payment for their services by charging a monthly subscription fee or charging a fee each time they are able to get an item removed from your credit report. And if a company is able to get an item deleted from all three of your credit reports, you'll be charged the fee times three.
With the subscription model, a credit repair customer is charged for the services rendered by the credit repair company during the prior 30 days. Normally those charges are made to the credit card on file with the company.
Credit repair costs can reach hundreds or even thousands of dollars—and there is no guarantee the company will be successful getting credit entries deleted from your credit reports. In fact, it is a violation of CROA for a credit repair company to guarantee that they can get negative items removed from your credit reports.
Why Paying for Credit Repair Isn't Worth It
Credit repair companies cannot do anything for you that you cannot do for free yourself. So what is the value of paying someone else to dispute credit information on your behalf? In many cases, there is none.
Rather than paying for credit repair services, you'll likely be better off redirecting your efforts toward more proven methods of improving your credit reports and scores. Instead of paying a company to send dispute letters to the credit bureaus, which you can do online yourself at no cost, you can use that money to pay off any delinquent obligations, outstanding collections or credit card debt.
Going forward, employ time-tested strategies for improving credit. Paying all your bills on time and paying down credit card debt are solid methods for building your credit—and you can do it yourself, for free, to improve your financial health.