Is Credit Repair Worth It
Credit repair services cost up to $150/mo. But you can do the same things without paying high fees. So is credit repair worth it? Read on to find out.
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Credit repair companies analyze your credit reports and dispute inaccurate items affecting your credit score. Professionals communicate with the credit bureaus on your behalf.
But there's a first work fee (signup fee) and monthly fees that can be equally or more expensive.
Why pay a hefty price tag when you can do credit repair yourself? In this guide, discover the pros and cons of credit repair services. Plus, find alternatives to improving your credit at the end.
Is it worth paying someone to fix your credit?
Paying for credit repair is worth it if you don't have the proper knowledge, time, or confidence to handle the disputes on your own.
You need to be thorough and skillful in your disputes. If you think professionals can help you better, it may be more beneficial to pay credit repair companies.
Legitimate credit repair companies do the following:
- Review and analyze entries in your credit reports
- Remove accounts that don't belong to you
- Verify items like bankruptcies and judgments
- Dispute debts and loans that can't be validated or verified
- Challenge negative items that are past the time limit to be included in your credit report
What's more, some credit repair companies correspond with your creditors on your behalf. Instead of disputing the credit bureaus directly, they talk to your creditors first.
The pros and cons may help you weigh the benefits.
Pros and Cons of Credit Repair Services
Pros:
- Expertise of credit repair professionals
- Faster disputes from more aggressive companies
- Your credit score may increase
- Qualify for more credit cards and loans
- Know more about your finances
- Save money in the long run from errors that impact your finances
Cons:
- Can be costly
- Doesn't eliminate debt
- Risk of scams and fraudulent practices
- Results aren't guaranteed
Speaking of costly, here's how much you may need to budget.
How much does credit repair usually cost?
Credit repair companies can charge around $50–$150/month. You also need to pay a first work fee that typically costs the same as the monthly fee.
The first work fee covers the initial work, such as:
- Setting up your online account
- Getting your credit reports
- Initial credit report analysis
- Initial rounds of disputes
Credit repair companies can charge your first work fee from 5–15 days after the start of the service. Then, you'll be charged the monthly fee for your chosen package.
How to Spot Credit Repair Red Flags
Credit repair costs can be hefty. To make sure you're not wasting your money, you need to look out for these red flags.
- Demands upfront fees
It's illegal for credit repair companies to charge you upfront fees before doing any work. Avoid companies who ask for payments first, promising to perform their service later. - Promises specific outcomes
No company can guarantee that your credit score will increase by XX points next month or that the credit bureaus will agree to remove all items in question.Always remember: "If it's too good to be true, then it probably is!" - Guarantees to remove all negative items
Only inaccuracies can be challenged. If your late payment or collections account is accurate and not outdated, it can't be taken off your credit reports. - Offers to create a new identity
It's unlawful to use a different SSN, or make a new identity to start fresh. It's fraud and you should run away from any company or professional suggesting it! - Lacks transparency
Any lack of transparency can lead to a scam. All companies should provide you with a written contract that includes all relevant information and states your rights as a consumer.
Credit repair is risky because it doesn't guarantee an increase in your credit score. New negative entries can still harm your credit during the process. To make credit repair effective, you should also work on settling debts, adding positive items to your payment history, and building solid financial habits.
Credit repair fees are no joke. So how do you know if credit repair services are not worth the cost?
When is credit repair not worth it?
Hiring credit repair companies may not be worth it if:
- You've just started building your own credit
- You only have a few items to dispute
- You've already had successful disputes (by yourself) in the past
You can always choose the DIY route and take matters into your own hands. You can do the leg work, analyze your credit reports, and send the dispute letters yourself.
You will follow the same dispute cycle as that of professional services. The only difference is you will be more hands-on with your credit reports, dispute letters, and current financial situation.
Here's how the process works.
How does credit repair work?
To help repair your credit, you or a credit repair service can:
- Review credit reports from Experian, Equifax, and TransUnion
- Spot inaccurate, invalid, or outdated items from your credit reports
- Send dispute letters and supporting documents to the credit bureaus
Credit bureaus will then investigate your disputes. Note that it takes 30–45 days to complete a dispute cycle.[1]
For each negative item you challenge, you'll need to allot this time before credit bureaus can retain or remove your disputed item.
Changes aren't always immediate, and your current transactions and payments affect your credit score. Realistically, you can expect improvements in your credit within the next 6–12 months.
Does credit repair actually work?
Credit bureaus will only remove disputed items when they're inaccurate, invalid, or outdated. There's no guarantee your disputes will result in removals or that your credit will improve fast.
If credit bureaus find your disputed items accurate, these negative items will remain on your credit report.
That said, if your creditors fail to respond to the credit bureaus, the disputed item/s may be removed.
If you think professionals increase your chances of removals, here are some of the best credit repair companies in the industry.
Best Credit Repair Companies
Lexington Law
Lexington Law has removed over 83 million negative items since 2004. It offers one credit repair package costing $139.95/month.[2] You get the service of lawyers and paralegals experienced in disputing the credit bureaus.
Free Online Credit Assessment
- Free Credit Score
- Free Credit Report Summary
- Free Credit Recommendation
- 5 Minutes to Check Your Credit
Credit Saint
Credit Saint offers 3 packages ranging from $79.99–$139.99/month.[3] It's been in the industry since 2004. Plus, it offers a 90-day money-back guarantee. You can request a refund if there are no removals within the first 90 days of the service.[4]
Sky Blue Credit
Sky Blue Credit offers individual and couples plans ranging from $79–$149/month. It specializes in mortgage preparation and can help prepare your credit if you want to apply for a home loan or refinance your current mortgage.[5]
Get Started on Your Credit Repair
- No charges for the first 6 days
- 90-day guarantee
- 45-day dispute cycle
- Cancel service anytime
How to Do Credit Repair By Yourself
Always remember, there's nothing credit repair companies do that you can't do! But you need time, resources, and knowledge to do credit repair effectively.
With that said, you can do the following:
- Get your credit reports
AnnualCreditReport.com offers free weekly credit reports to consumers. Get online copies of your Equifax, Experian, and TransUnion reports. - Review for errors
Review everything. Look for wrong and outdated details in your personal information. Keep an eye out for mistakes in your entries, outdated items, and accounts that aren't yours. - Write dispute letters
Once you're done reviewing, it's time to write your dispute letters. Ensure you state a strong reason in your letters and attach evidence to support your dispute.Ensure your disputes are thorough and well-planned to maximize the chances of successful removal.
Learn how to effectively dispute and remove inaccurate items - Wait for results
Once the credit bureaus receive your letter, they have 30–45 days to investigate it. Then, they have an additional 5 days to inform you of the results.
The DIY credit repair requires significant time and effort, especially if you need to research more on your state laws and build confidence in writing effective dispute letters.
However, the silver lining is that you can save hundreds or even thousands of dollars by avoiding fees. Plus, you'll gain valuable hands-on experience managing your finances. The effort you invest could be well worth it.
No, they're not the same. Credit repair companies challenge credit bureaus to remove errors. Credit counselors offer broader services like budgeting and debt management, often from non-profits, and can refer you to other resources based on your needs.
Alternatives
Having said all this, you aren't limited to hiring credit repair companies or doing DIY to improve your credit.
Here are alternatives you can consider to gradually fix your credit.
Credit builders
Credit builders help you add more positive transactions to your credit report. Over time, it can help boost your credit score and you only need to pay a fraction of the fees from credit repair companies.
For more affordable alternatives to traditional credit repair, consider credit builder apps like Kovo Credit Builder and Self.
Build Credit & Earn Rewards
- No credit check
- Instant approval
- 0% APR / $0 fees
Credit Building Made Easy
- No credit pull required
- With 0% interest
- Open your account in minutes
Apply for a Credit Builder Account at Self
- Get the Credit Builder Account that helps build credit today!
- Choose the plan that fits within your budget
- Monthly payments are reported to the three major credit bureaus.
Credit repair apps
Instead of signing up for a credit repair company, you can use a credit repair app. Most credit repair apps use artificial intelligence to review your credit reports, analyze entries, and help you craft dispute letters.
Play the waiting game
If you want to save money and time, you can always wait until your negative marks fall off your credit report. Negative items can stay on your credit report for 2–10 years.[6]
Bottom Line
Credit repair companies are worth it if you want the confidence of professionals. The best credit repair companies have been around for over a decade. And they showcase expertise and experience in dealing with credit bureaus.
But they can be costly. You can incur a considerable expense to remove only several items that impact your credit score.
Instead, you can always learn more about your state's credit laws and how to remove negative items like outdated collection accounts and inaccurate late payments. Then, monitor your monthly credit reports and write the dispute letters yourself.
References
- ^ CFPB. If a credit reporting error is corrected, how long will it take before I find out the results?, Retrieved 05/13/2024
- ^ Lexington Law. Our Services, Retrieved 05/30/2024
- ^ Credit Saint. Packages, Retrieved 05/13/2024
- ^ Credit Saint. Packages, Retrieved 03/16/2024
- ^ Sky Blue Credit. Member Pricing, Retrieved 03/16/2024
- ^ CFPB. How long does negative information remain on my credit report?, Retrieved 05/13/2024
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