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Is It Worth Paying Someone To Fix Your Credit?
If you’re struggling with poor credit, you’re not alone. The average American has accrued more than $90,000 in debt [*], while a full one-third of U.S. adults have poor or fair credit scores ranging between 300 and 620 [*].
Fixing your credit can be a time-consuming process. But while credit repair services may promise simple remedies, they come with significant risks.
More than 50% of all credit repair complaints submitted to the Consumer Financial Protection Bureau (CFPB) in 2023 involved fraud and scams [*]. If you choose to work with a credit repair service, not only do you risk becoming the victim of fraud, but it can also be very expensive.
Before you decide to pay someone to fix your credit, there are a few important things to know.
In this guide, we’ll explain how credit repair works, how to tell if a credit repair company is legitimate (or a scam), and ways you can repair your credit score on your own — and for free.
How Does Credit Repair Work?
Credit repair companies claim to be able to help you quickly rebuild your credit score through a combination of legal and questionable methods — including removing incorrect and negative information from your credit history with the three major credit bureaus (Experian, Equifax, and TransUnion).
These credit repair companies make much bolder claims than credit counselors, who aim to help consumers better understand personal finance basics — including budgeting, making minimum payments, and the factors that affect credit scores (such as your current debt, payment history, and credit utilization [*]).
Credit repair services often charge a subscription fee, which can range from $20 to $150 per month [*].
Others use a “pay-per-delete” method, by which you only get charged when the company successfully deletes an item on your credit report [*].
Paying a credit repair company can be risky. Scammers often set up fake credit repair sites and trick you into paying for their services upfront (which is illegal). Once they have your money or financial information, they disappear and leave you in more financial trouble.
Even legitimate credit repair services can persuade you with promises of good credit, but the truth is that no company can guarantee to increase your credit score. With a bit of work, you can repair your credit score on your own without paying someone and facing potential risks.
💡 Related: The 10 Best Credit Monitoring Services of 2024 →
What Can a Credit Repair Company Actually Do?
Credit repair companies often use marketing strategies to entice people with bad credit into using their services. However, credit repair companies are federally regulated. Under federal law, there are certain things they can and cannot do to help fix your credit.
Here’s a breakdown of the benefits and limitations of using a credit repair company:
The bottom line: Legitimate credit repair companies may be able to help you remove inaccurate information and clean up your credit score — but at a significant cost. The only reason to hire one is if you feel overwhelmed or know you won’t go through the process yourself.
How Much Does Credit Repair Typically Cost?
Credit repair costs depend on the company’s payment structure.
For a subscription-based method, you can expect to pay $20 to $150 monthly. Some credit repair companies charge a one-time “first work” fee that covers the cost of setting up your account and reviewing your credit report. Usually, there are unlimited disputes with a monthly subscription plan [*].
If the company uses a pay-per-delete system, you’ll only pay for items that get removed from your credit file. The fee depends on the specific information being deleted. For example, it might cost $25 per bureau to remove personal details and $100 per bureau to remove a bankruptcy. However, some companies charge much higher fees.
Keep in mind that it usually takes over a year to see improvements to your credit score (if any). You’ll need to continue paying the company for at least that long, so it can get pretty expensive.
How To Tell If a Credit Repair Company Is Legitimate (Or a Scam)
If you choose to work with a credit repair company, it’s important to understand the risks — especially if you’re in a financially vulnerable situation.
In 2023, the CFPB reached a $2.7 billion settlement with some of the biggest U.S. credit repair companies, including Lexington Law, over deceptive marketing and illegal sales tactics [*].
Before you start working with a credit repair company, you should understand its process, pricing, and the services it provides.
You should also research the company thoroughly and check for complaints from the CFPB, Better Business Bureau (BBB), and Federal Trade Commission (FTC).
Here are some things to watch out for that can help you determine whether a credit repair service is legitimate or a scam:
They require payment upfront
Under the Credit Repair Organizations Act (CROA), it’s illegal for credit repair services to ask for payment until they’ve completed the services they’ve promised.
However, most credit repair companies use a monthly fee to bypass this requirement. Even after the services have been completed, companies must wait six months after the promised result to bill you [*].
Promises to increase your credit score
If you come across a credit repair company that outright promises to improve your credit score by a certain amount, or guarantees a specific outcome, it could be a credit repair scam. At the very least, it’s too good to be true.
Repairing your credit takes time, and no company will be able to give you guaranteed results in a short period of time. Real credit repair companies should be upfront about this and set realistic expectations.
Demands that you don’t contact the credit agencies yourself
Fake credit repair services might insist that they handle all communications with credit agencies, and ask you not to reach out directly.
If you come across this type of demand, assume the company is fake. It might be run by a scammer that has no intention of actually speaking with the credit agencies. A legitimate service will allow you to be involved in the process if you want.
Any mention of “piggybacking” on someone else’s credit
If a credit repair company mentions piggybacking on another person’s credit, consider this a major red flag. Credit piggybacking is a way to build credit or improve your credit score by becoming an authorized user on someone else’s credit card.
It can be a useful tactic if you get added to a friend or family member’s credit card. However, credit repair companies often engage in for-profit piggybacking — which occurs when they add you to a stranger’s account who has good credit, and then charge you a fee [*].
You’re asked to misrepresent information about yourself
It’s illegal for credit repair companies to advise you to misrepresent yourself in order to avoid having your actual credit associated with your true identity.
If you come across a company that suggests you create a new credit identity, often by using a Credit Protection Number (CPN) or applying for an Employer Identification Number (EIN) instead of your Social Security number (SSN), it’s likely a scam and the company should be reported to the FTC.
They’re unclear about their services or can’t answer simple questions
A legitimate credit repair company should be able to answer all of the questions you have about using its services, including how much it will cost. If a company can’t provide direct answers or is unwilling to explain its credit repair process to you, you might be dealing with a scam.
💡 Related: Account Services Call Scam: Everything You Need To Know →
How To Repair Your Credit On Your Own
Repairing your credit on your own is entirely possible, but it can be time consuming. To start, you’ll have to request your credit report, review it, and contact the bureaus to make any changes.
It’s also important to know your rights when repairing your own credit.
Under the Fair Credit Reporting Act (FCRA), you have the right to know what’s included in your credit report and the right to dispute incomplete or inaccurate information. Credit agencies are required to fix or delete information that is inaccurate, incomplete, or unverifiable [*].
Here are the steps you should follow to improve your credit on your own.
1. Get your free credit reports from all three bureaus
Before you can start improving your credit, you should review your credit report. You’re entitled to one free credit report each week from Equifax, Experian, and TransUnion through AnnualCreditReport.com. You can request the three reports together or individually.
If you’ve already used up your allocated free credit reports, you can pay for another one. Legally, credit reporting agencies can’t charge more than $14.50 for a credit report [*].
2. Inspect them for inaccurate and outdated information
Next, you’ll want to read your credit reports and check for inaccuracies or outdated information.
When reviewing your report, keep these things in mind:
- Check that your personal information is correct
- Verify that your listed employers are accurate
- Make sure public records, like bankruptcies, are valid
- Look for credit or savings accounts and personal loans you don’t recognize
- Review the record of hard credit inquiries
If you notice anything suspicious on your credit report, you should consider freezing your credit. Unlike a credit lock, a credit freeze is free and prevents lenders from accessing your credit report. This way, scammers can’t open fake accounts under your name.
3. Dispute errors and unverifiable information
If you notice any errors or unfamiliar information on your credit file, you should dispute the errors in writing to all three credit bureaus.
Explain what information you believe is inaccurate and why, and provide documents to validate the negative items. You should also contact the loan issuer or company that first reported the erroneous information.
The CFPB has detailed instructions online for disputing credit report errors. There is also a template you can use to format your letter to the credit bureaus [*].
4. Use less of your available credit
One of the biggest factors that can impact your credit score is your credit utilization. When you use less of your available credit, it has a positive impact on your credit score.
The reverse is also true — when your balance is close to your credit limit, it can negatively affect your credit. Using less of your available credit and keeping your balances low can also help you achieve the best credit.
5. Make multiple payments each month
When improving your credit score, paying off debt should be a priority.
To pay down your balances faster, consider making multiple small payments throughout the month instead of one big payment. For example, if you make a payment every two weeks, it could help you pay off your debt faster. As an added bonus, you’ll spend less money on interest.
6. Consider consolidating your debt
If you’re facing debt on multiple accounts, consolidating your debt could be a good solution.
When you consolidate debt, it combines all of your payments into one. For example, if you have high balances on three credit cards, you could consolidate the credit card debt with a balance transfer card — and make a single monthly payment to one creditor instead of three separate ones.
Consolidating debt can help improve your credit score in a few ways. When you make your monthly payment on time consistently, your credit score will go up. It can also lower your credit utilization, which boosts your score over time [*].
7. Track your progress with credit monitoring
As you continue to repair your credit score, it’s a good idea to monitor your credit on a regular basis.
Credit monitoring providers like Identity Guard can help you identify changes to your credit report and spot potential fraud. Many services also provide alerts if your financial information is found in a data breach or on the Dark Web.
The Bottom Line: Don’t Get Fooled By Fake Credit Repair Agencies
Credit repair services can seem like a good way to fix your credit fast. In reality, these services are often overpriced and can even be dangerous. You can do everything that a credit repair company can do — on your own, for free.
To keep your credit score positive, focus on making on-time payments, keeping your credit utilization low, and reporting outdated or erroneous information. You should review your credit report every year to make sure it’s accurate.
If you want to protect your sensitive information from fraudsters, consider using an identity theft protection service.
With Identity Guard, you get access to three-bureau credit monitoring, as well as fraud alerts, data breach notifications, and Dark Web monitoring. If you need help, Identity Guard’s U.S.-based agents are available 24/7 to help you correct your credit report or deal with potential fraud. Plus, every plan includes $1 million in identity theft insurance coverage.
