How to Spot and Avoid Credit Repair Scams

What Is Credit Repair?

Credit repair is when you try to remove or change information that's on your credit report, either on your own or through a paid service. For consumers, the goal is often to get rid of negative information in an attempt to increase credit scores. However, credit repair companies don't have a magical fix for your credit—despite some of the promises credit repair companies make.

If there is an error or inaccurate information on your credit report, a credit repair company might be able to get it changed or removed by disputing the information. But you have the right to dispute the information with your creditor or a credit bureau yourself for free. Experian makes this easy for you to do with the online Experian Dispute Center.

But credit bureaus can't remove accurate negative information before its scheduled removal date. Accurate negative items can remain on your credit reports for up to 10 years.

Read more: How Long Does It Take for Information to Come Off Your Credit Reports?

Are Credit Repair Companies Legitimate?

The credit repair industry includes both legitimate operators and bad actors. While some companies provide helpful services like assisting you with disputing errors on your credit reports, others engage in questionable or illegal practices.

For example, some disreputable companies may file false police reports or identity theft reports with the FTC, then falsely claim that negative items on your credit report resulted from identity theft or credit fraud. Others might encourage you to lie to credit bureaus or file false police reports yourself—actions that are illegal and unlikely to improve your credit.

As a result, it's critical that you stay vigilant as you navigate various credit repair offers and promises.

Read more: Should You Use a Repair Service?

How to Spot a Credit Repair Scam

The safest option is to avoid paying for credit repair altogether. The Fair Credit Reporting Act gives you the right to dispute inaccurate or incomplete information on your credit report for free, and there's nothing a credit repair company can do for you that you can't do yourself.

If you still want to hire a credit repair company, though, watch for these red flags:

• Upfront fees: Legitimate credit repair companies won't charge you before completing services. Any company demanding payment before doing work is violating federal law.
• Guaranteed results: No company can promise to improve your credit score by a specific number of points or within a certain timeframe. Credit outcomes depend on your unique situation and how credit bureaus respond to disputes.
• Claims to remove accurate information: Companies that guarantee they can remove accurate negative items from your credit reports are lying. Only inaccurate or unverifiable information can be removed.
• Selling tradelines or authorized user accounts: Avoid companies that recommend purchasing authorized-user status on someone else's credit card account. This practice is questionable and may not improve your credit.
• Offering credit privacy numbers: Companies suggesting you use a credit privacy number (CPN) to start fresh are likely offering stolen Social Security numbers. Using a CPN to apply for credit is illegal.
• Poor transparency: If a company won't clearly explain your rights or how they operate, that's a warning sign.

How to Avoid Credit Repair Scams

Taking time to research and verify a company's credentials can save you money and prevent further damage to your credit. Here are key steps to avoid falling victim to credit repair scams:

• Review your credit reports first. Check your credit reports from all three major credit bureaus before contacting any company. You may find you can dispute errors yourself without paying for help.
• Research the company thoroughly. Look up reviews on the Better Business Bureau and check for complaints with the CFPB. A pattern of negative reviews or unresolved complaints is a major red flag.
• Verify their credentials. Confirm the company is registered to do business in your state. Most states have a searchable online database of registered companies you can look at.
• Read the contract carefully. Before signing anything, review the entire contract. Make sure you understand what services they'll provide, how much you'll pay and when payment is due.
• Know your legal rights. The Credit Repair Organizations Act requires companies to provide you with a written contract and a disclosure of your rights. Additionally, they must give you three days to cancel without penalty.
• Get everything in writing. Any promises about results, timelines or services should be documented in your contract. Avoid companies that make verbal guarantees they won't put in writing.
• Watch for pressure tactics. Legitimate companies will give you time to make a decision on whether or not to hire them. Be wary of high-pressure sales tactics or demands for immediate payment.
• Be skeptical of ads and influencers. You may see social media influencers touting their "great results" from using a credit repair company, or hear an ad on your favorite podcast, but be wary: Just because a credit repair company advertises, doesn't mean it's legitimate. If you hear about a credit repair company on social media or through an ad, do your due diligence and investigate it before signing up.

How to Repair Your Credit Yourself

If your credit report has inaccurate information, you can repair it on your own by closely reviewing your credit reports and disputing inaccuracies. You can get your credit report for free from each credit bureau at AnnualCreditReport.com.

There may also be negative, but accurate, information on your credit reports that's hurting your credit scores. The credit bureaus will remove most negative marks after seven years, and their impact on your credit should lessen over time.

In the meantime, you can focus on:

• Understanding what affects your credit score
• Paying your bills on time
• Paying down credit card balances
• Using Experian Boost^®ø to add more positive information to your Experian credit report, such as eligible rent, utility, phone, internet and streaming services payments

Even though the impact of negative marks can diminish over time, it still might take months or years to get an excellent score.

Tip: Consider opening a secured credit card or credit-builder loan if you have a thin file, are just starting to build credit or are trying to repair your credit from past mishaps.

Monitor Your Progress

You are your own best advocate when it comes to verifying your credit information and working to improve and repair your credit. Experian offers free credit report monitoring with free credit score tracking, so you can check to see what's impacting your score the most and track your progress as you work to improve your score over time.