What Do Credit Repair Companies Do?

Written By Jeff Hindenach
Last updated March 9, 2020

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Credit
July 25, 2019

Simple. Thrifty. Living.

Poor credit can cause a lot of additional financial problems. When you have poor credit, you often pay higher prices for car insurance, rent, and other necessities. Of course, you can also expect your credit card company to charge high interest.

If you have seen the problems associated with bad credit, you may have thought about hiring one of the best credit repair services to help. Before you hire anyone, make sure you understand what the companies do and whether you want to pay for those services.

A good credit repair company will review your credit history to find and remove mistakes. For example, Lexington Law will review your credit report and force any creditors not following FTC regulations to remove derogatory information from your credit report.

According to the Federal Trade Commission (FTC), about 20% of Americans have inaccurate information on their credit reports. Challenging those mistakes can help your credit rating improve quickly.

Eliminating inaccuracies usually involves:

  • Reviewing your credit report to find potential problems.
  • Writing letters to the credit reporting agencies and the company that reported the wrong info.

The bulk of what credit repair companies do is send letters to the credit bureaus to contest negative items on your credit report. How do items get removed? Once the credit bureaus receive the letters, they have 30 days to research the dispute. If they can’t find any evidence that the negative item is legitimate, it must be removed from your credit report.

Keep in mind that most negative items on your report can probably be verified by the lender, so many items will probably not be removed. Most credit repair agencies will start by going after the smaller negative items (like missed payments) before going after bigger items like bankruptcy or foreclosure, since the smaller items have a higher chance of being removed.

If you are looking to repair your own credit, you can also send these same letters yourself, but keep in mind that the credit bureaus frown on sending too many requests at one time, which can hurt your chances of having items removed.

Many credit repair companies will also send cease and desist letters to any creditors or collection agencies that are harassing you about paying your bills. This does not improve your credit score in any way or remove any of your debt, but it will help the phone calls and emails stop until you have a better idea of how to deal with your debt.

Some credit repair companies include this option in their basic package, although many require you to purchase a more expensive package in order to get this option. Those packages often include things like credit report monitoring and identity theft protection, which can be great extras to have if you are trying to improve your credit.

Credit card companies may also give you advice that helps you improve your credit rating. For example, they may tell you to:

  • Pay off high-interest credit card debt.
  • Stay current with all of your bills.
  • Get a secured credit card that requires money as collateral.

Here are what the best credit repair companies offer in the way of credit counseling:

Sky Blue Credit Repair: Sky Blue offers two options when it comes to credit counseling: Score Assistance and Credit Rebuilding. With Credit Rebuilding, you get expert advice on how to apply for new credit cards and rebuild your credit in conjunction with the credit repair services. Score Assistance will give you tips and tricks on how to improve your credit score.

Credit Saint: With Credit Saint, you get a team of dedicated credit experts that not only help you restore your credit, but give you tips on how to improve your credit in the future. Check out our Credit Saint review to learn more about the service.

CreditRepair.com: You will get a dedicated credit repair team at CreditRepair.com that will help you understand your credit. The website also has an entire section dedicated to credit education information. Our CreditRepair.com review gives more details about the company’s credit education options.

Pyramid Credit Repair: Pyramid is one of the most honest credit repair companies around. Your credit repair representative will give you tips on improving your credit, even before you sign up for the service.

Hiring a credit repair company usually costs under $100 per month. It’s not a huge sum of money, but it’s money that people with bad credit may not have. Companies like Sky Blue Credit Repair are as low as under $80 per month.

If you don’t want to spend it, then you can take credit repair steps on your own. Many people can review their credit histories and dispute inaccuracies without help from a professional. You can use the money you save to improve your credit even more.

Not everyone feels confident writing letters and confronting companies, though. If you would rather have someone else do the work, then a credit repair company may be the right solution to you.

Before you hire anyone, make sure you do some research to learn about the company’s success rates and experiences with other consumers. Most credit repair companies do good work. Others will try to drag out the process for as long as possible to take more money from you.

About the Author

Jeff Hindenach

Jeff Hindenach is the co-founder of Simple. Thrifty. Living. He has a long history of financial journalism, with a background in newspapers such as the San Jose Mercury News and San Francisco Examiner, as well as being published in The Huffington Post, New York Times, Business Insider, CNBC, Newsday and The Street. He believes in giving readers the tools they need to get out of debt.

About the Editor

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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