What is credit repair?
With a positive title like “credit repair,” it’s no wonder that people fall prey to the fraudulent practices of credit repair companies. They promise to “fix your credit” by disputing negative items on your credit report. They say they can get any item off your report, but only real inaccuracies can be removed permanently—and you can do that yourself for free. Credit repair companies make sure you know when these items are removed, but don’t tell you when they show up again.
These companies offer a seemingly simple solution to credit debt that’s appealing in a few ways.
- It seems easy and immediate.
- It appears to be permanent.
- You don’t have to do much work.
Unfortunately, none of those promises are true. Credit repair companies offer to “fix your credit” by removing negative items from your credit report. They offer to file disputes on negative items on your behalf with the credit bureaus and get them removed. The problem with this approach? The entire strategy is based on exploiting a loophole in the credit system. When accurate items are removed, it’s only temporary—a few months at best.
Why credit repair doesn’t work.
Credit bureaus are bound by federal law to respond to every disputed item within 30 days. And if they don’t respond, the disputed information must be removed from the credit report. Credit repair companies file lots of disputes and wait for the credit bureaus to miss a deadline.
When that happens, the credit repair company jumps to action, calling the consumer to announce the item was removed and suggesting the consumer pay more each month to “keep up the momentum and go after the rest.”
The other problem? If the item was accurate; if it was removed solely because the bureau missed the deadline, it will simply reappear on your credit report within 2-3 months. That’s because any creditor can, by law, re-verify an accurate item, at any time, and get it back on to the credit report. And if there’s a debt they’re trying to collect, they will.
Even worse? If there are any real errors, you can dispute them on your own. For free. Learn how to do that here.
What you need to know.
The credit repair companies will:
- Exploit a loophole that that only offers temporary relief.
- Do something you can do for yourself for free.
- Charge you up to $100 a month for their service.
There are ways to improve your credit that last. Working Credit can helps people establish and build their credit by providing the lifelong knowledge and tools they need to reach your financial goals.
FAQs
Credit repair companies offer to “fix your credit” by removing negative items from your credit report. They offer to file disputes on negative items on your behalf with the credit bureaus and get them removed. The problem with this approach? The entire strategy is based on exploiting a loophole in the credit system.
Is working with a credit repair company worth it? ›
Credit repair services can potentially help you improve your credit, but in most cases, it likely isn't worth it. After all, you can do anything a credit repair service can do, and you can do it for free.
What is a loophole to remove collections from a credit report? ›
A 609 Dispute Letter is often billed as a credit repair secret or legal loophole that forces the credit reporting agencies to remove certain negative information from your credit reports.
Can your credit really be repaired? ›
Legitimate credit repair companies can help you remove inaccurate information from your credit report, which may be damaging your credit score. However, they can't do anything for you that you couldn't do on your own—and for free. In addition, there are some disreputable credit repair companies that you should avoid.
Who's the best credit repair company? ›
According to our data, some of the best credit repair companies include Credit Saint, The Credit Pros, Sky Blue Credit Repair, MSI Credit Solutions and The Credit People.
How fast can a credit repair company fix your credit? ›
Policies and procedures vary by creditor but will usually include back-and-forth letters to get everything in writing. On average, credit repair takes about three to six months. Your score should gradually improve throughout the process each time a creditor agrees to make a change in your favor.
Is a credit repair business risky? ›
There is a risk of scams
Not all credit repair companies operate ethically, and some may engage in deceptive practices. It's crucial to research and vet any company thoroughly to avoid falling victim to scams or fraudulent schemes. Make sure you know how to protect yourself from debt relief and credit scams.
What is the 11 word credit loophole? ›
Summary: “Please cease and desist all calls and contact with me, immediately.” These are 11 words that can stop debt collectors in their tracks. If you're being sued by a debt collector, SoloSuit can help you respond and win in court. How does the 11-word credit loophole actually work?
Is it true that after 7 years your credit is clear? ›
In general, most debt will fall off of your credit report after seven years, but some types of debt can stay for up to 10 years or even indefinitely. Certain types of debt or derogatory marks, such as tax liens and paid medical debt collections, will not typically show up on your credit report.
What is the fastest way to remove collections from credit report? ›
How can you remove collections from a credit report?
- Step 1: Ask for proof. There needs to be evidence that the debt is genuinely yours to pay for it to stay on your credit report. ...
- Step 2: Look for and report inaccuracies. ...
- Step 3: Ask for a pay-for-delete agreement. ...
- Step 4: Write a goodwill letter to your creditor.
It's not possible to wipe your credit history clean. Negative items like late payments, collections and bankruptcies typically remain on your credit report for several years. However, you can rebuild your credit with on-time payments, debt reduction and responsible credit account management.
Can I pay someone to fix my credit score? ›
While working with a credit repair company can be a good option for improving your credit score, it's just one of many possible solutions, and it won't be the right fit for everyone. Outside of trying to repair your credit on your own, you can consider seeking credit counseling or a debt settlement company.
Is national debt relief legitimate? ›
Is National Debt Relief legit? National Debt Relief is an accredited member of the American Association for Debt Resolution (AADR). It has been around since 2009 and has helped over 600,000 individuals reduce their debt. It also has an A+ rating from the BBB (Better Business Bureau).
Is it worth paying someone to fix your credit? ›
However tempting it may be to pay someone to undo damage, you are your own best resource. In short, no one can legally remove accurate and timely negative information from a credit report, and everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost.
What is the fastest way to repair your credit? ›
Some of the quickest ways to fix your credit score include:
- Applying for higher credit limits successfully.
- Consolidating your debt.
- Disputing inaccurate entries on your credit record.
- Ensuring you pay your bills on time.
- Paying down outstanding balances.
Best debt relief companies
- Best for debt support: Accredited Debt Relief.
- Best for customer satisfaction: Americor.
- Best for large debts: National Debt Relief.
- Best for credit card debt: Freedom Debt Relief.
- Best for affordability: New Era Debt Solutions.
- Best longstanding company: Pacific Debt Relief.
However, as businesses go, a credit repair business is one of the most affordable home-based businesses you'll ever find. The profit potential is huge, and all you need is a computer and a phone. With the right focus, you can run your very own business in less than 30 days.
Is it hard to start a credit repair business? ›
Keep in mind that starting a credit repair business involves a lot of work and effort, and it may take time to build a client base and grow your business. But with the right combination of education, planning, and marketing, you can create a successful credit repair business that provides a steady source of income.
How much can you charge for credit repair? ›
Monthly subscription model
Nearly all of the most successful credit repair businesses charge a recurring monthly subscription. Many charge as low as $59 and some as high as $179 or more; but we believe $99 is a good middle ground to make it affordable and remain profitable.
Can credit repair remove debt? ›
Usually not. Companies that promise to repair your credit can't remove true information. But negative information does go away over time. Most negative information will stay on your report for seven years, and bankruptcy information will stay on for 10 years.
