Credit Score

Credit Repair Companies: How It Works, What It Costs, And Is It Worth It?

January 24, 2021 by
credit repair companies

Having bad credit can result in a lot of stress in your life, especially when it comes to your finances. You'll find it difficult to get approved for a credit card, mortgage, loan, or even to rent an apartment. There are many ways to improve your credit score, including using credit improvement tools, but if your situation is serious or urgent, using a credit repair company can be a faster solution.

What's a credit repair company and what do they do?

Typically, fixing your credit score is a lot of work, and it could take a long time depending on how bad the situation is. It takes research, working with different companies and tools, and understanding what impacts your score the most.

You can think of a credit repair company like an advisor/manager for your credit score. They'll pull your credit score from all major credit bureaus and then do analysis on what needs to be fixed, what needs to be given priority, what items should be disputed, and what further action you can take to boost your score. They'll do all the negotiation with creditors in removing inaccurate items on your reports.

The best credit repair companies will also recommend actions you can take to boost your score. They'll give recommendations on tools to use, and accounts to apply for that can help you accelerate the process.

Bewards of scams: How to choose a legitimate credit repair company

Unfortunately, the credit repair industry is full of scammers. They'll try to take advantage of the fact that people who need credit repair are usually in an urgent situation. They'll try to pounce on selling them products and services that don't do anything to actually repair their scores.

How to avoid scams: If you're in the process of searching for a credit repair company, follow smart diligency by reading reviews and testimonials, and avoiding companies that make outlandish promises that sound too good to be true. Credit repair companies can remove many things from your score that negatively impact you, but not if they're accurate and you're 100% at fault.

How long does it take for them to repair my credit score?

For most people, you should expect to work with your credit repair company for around 6 months.

Credit repair should be viewed as a month to month process. Remember that credit cycles are 30 days. It is not a quick fix that can be changed in a matter of days. How long it actually takes varies depending on the state of your current score, where you want it to be, and how many negative items you have on your account that needs to be disputed/removed.

How much can my credit score increase from working with a credit repair company?

On average, people who stayed with their credit repair company for at least 6 months saw a 100 point increase to their score. Again, that isn't guaranteed and depends on many different factors.

How much does it cost?

Credit repair companies all vary in price, and they each offer different packages. Some companies charge monthly, some charge per item deleted. It's best to stay away from companies who charge per dispute and don't provide a clear pricing structure. For instance, some lower reputation companies may charge you up to $1000 for a single deletion.

The best companies all charge a monthly fee and offer a certain number of disputes.

Pricing is around $80 to $100 per month for standard credit repair service. This can go all the way up to $150 per month if you need a more aggressive approach and need faster results.

Is it worth it? Who should use a credit repair company?

Yes, credit repair companies are worth it if you need help with improving your score. It's most helpful for people with lots of negative items that are affecting their scores. Credit repair companies will handle all of the investigation, negotiations, and disputes for you. Collections agencies are infamous for being brass, and can intimate a lot of people if they're not used to negotiating on the phone. Having an experienced professional handle it for you can help take a lot of stress off your plate, and save you hours of time each month as well.