How Much Does Credit Repair Cost?

How Much Do Credit Repair Companies Charge?

There are tens of thousands of credit repair companies in the United States. Many work on a monthly subscription basis, with typical fees ranging from $50 to $150, depending on the services they offer. These services generally include targeting inaccurate negative entries on your credit reports, such as misreported late payments or collection accounts.

Some credit repair companies offer add-on services (at additional cost) such as targeting inaccurate credit inquiries and furnishing you with regular credit reports and credit scores.

The law prevents credit repair companies from collecting fees until they have provided the services they promise, so their subscription fees typically cover work done in the month preceding the bill.

While federal law prohibits credit repair companies from levying upfront fees, some charge an initial setup fee, ranging from $70 to $200 after they establish an account for you.

Are Credit Repair Companies Regulated?

The credit repair industry has been plagued by scammers and other bad actors, so it's wise to investigate any credit repair company before you do business with them, and to be aware of the laws legitimate companies must adhere to.

All U.S. credit repair companies are governed by the Credit Repair Organizations Act (CROA), which specifies that credit repair companies:

• Must provide you with a written contract that spells out what they will do for you and how they will charge for their services
• Must allow you to cancel the contract within three days of signing it, at no charge to you
• Cannot collect fees until they have provided the service they promise
• Cannot promise services they can't legally provide, such as removing accurate negative information from your credit reports or guaranteeing they can increase your credit scores by a specific amount

If a credit repair company solicits your business by phone, it may be subject to the federal Telemarketing Sales Rule as well as the CROA. In that case, the company cannot seek payment until after it provides you a credit report showing the results of its work, generated at least six months after those results have been achieved.

Is It Worth Paying Someone to Fix Your Credit?

Credit repair companies cannot do anything you can't do yourself for free, with modest investments in time and patience. You have the right to file a credit report dispute online (usually the quickest), by phone or by mail. The U.S. Consumer Financial Protection Bureau (CFPB) provides ready-made form letters that can help you expedite the process if you prefer to dispute by mail.

If you're inclined to hire a credit repair company in an effort to save time, keep in mind that no company can do all your legwork for you. For a credit repair company to do its work, you may need to provide it with receipts or other evidence that given credit report entries are inaccurate.

In the end, you must decide whether the often steep fees credit report companies charge are worth it to you. For many consumers, they probably are not. In the words of the CFPB, "There is no reason to pay someone else to dispute inaccuracies on your credit report for you as it is already a legal right available to you for free."

How to Fix Your Credit for Free

You can fix your credit at no cost, but it can take time, patience and discipline. Here's how:

1. Review Your Credit Reports

You can obtain free copies of your credit reports from the three national credit bureaus (Experian, TransUnion and Equifax) at the AnnualCreditReport.com website. You can also get your free credit report with Experian directly. Study them carefully and note any information that you believe to be inaccurate.

Pay particular attention to recent inquiries, notations of late or missed payments and accounts listed in collections. These can harm credit scores, and if they are assigned to you inaccurately, their removal from your credit reports could bring quick improvement to your credit scores. (If these entries are accurate, you cannot have them removed from your credit reports until they expire on their own.)

Note that inaccurate inquiries and accounts you don't recognize listed on your credit reports could be signs of credit fraud. In addition to disputing them with the credit bureaus, it may be wise to use the lender contact information found in your credit reports to follow up on potential criminal activity conducted in your name.

2. Work to Correct Inaccurate Credit Report Entries

You have the right to dispute any credit report information you consider inaccurate, and the process is and always has been free of charge. Each credit bureau has its own processes for submitting disputes online, via the U.S. mail or by phone. The CFPB provides sample form letters that can expedite the process.

Note that you may need to provide evidence, such as a bank statement or canceled check, to show that a misreported credit report entry is inaccurate. If the credit bureau requires this information, it will notify you.

3. Address Accurate Negative Entries in Your Credit Reports

If your credit reports include accurate listings of accounts past due or assigned to collection departments or agencies, those entries will remain on your credit reports for seven years from the date of the first missed payment that spawned them. Nevertheless, you may be able to ease their negative effects on your credit reports by bringing the accounts current and/or paying the balances on any collection accounts.

The benefit of paying off a collection account may depend on the nature of the debt (medical vs. non-medical, for example), the amount of the debt and even which scoring system is used to generate your credit score.

4. Adopt Good Credit Habits Going Forward

Removing inaccurate negative information from your credit reports can improve your credit scores relatively quickly, but credit score improvement is typically a long game. To promote steady score improvement over time, strive to maintain good credit management behaviors:

• Pay your bills on time every month.
• Avoid excessive balances on credit cards and other revolving credit accounts.
• Seek new credit only as you need it.
• Cultivate and responsibly manage a variety of credit accounts, including a mix of installment loans and revolving debt.

As you commit to good credit habits, your credit score should slowly improve over time.

How Long Does It Take to Repair Your Credit?

The U.S. Fair Credit Reporting Act requires credit bureaus to investigate disputes they receive—from you or a third-party credit repair company—within 30 to 45 business days. Upon completion of an investigation, the bureau must notify you of the result within five business days.

If you have accurate negative information on your credit reports, neither you nor any credit repair company can legally have it removed, but all negative entries eventually expire and disappear from your credit reports on their own. Most negative entries, including late payments, accounts turned over to collections and foreclosures or repossessions of financed property, expire after seven years. An exception is Chapter 7 bankruptcy, which stays on your credit report for 10 years from the date when you file for protection with the bankruptcy court.

The Bottom Line

Credit repair companies can be costly and, because they don't do anything you can't do yourself with a little time and effort, they're probably not worth it for most consumers. If you choose to fix your credit yourself, you can track your progress by regularly checking your FICO^® Score^☉ for free from Experian.