Key takeaways

  • Credit repair is the process of disputing inaccuracies on your credit report and building better financial habits.
  • Not every credit repair company is legitimate, but there are ways to research and find trustworthy companies.
  • You can also repair your credit on your own if you don't want to work with a company.

Mistakes happen all the time, and credit reports are no exception. According to a recent study, over a third of consumers have encountered at least one mistake in their credit reports. Although that may not seem like a big deal, these mistakes can drag your score for up to seven years.

To get those mistakes removed, you’ll need to dispute them with the credit bureaus. That’s when a credit repair company may come in handy. However, the credit repair industry has been plagued with bad actors in the past. If you’re thinking about hiring a company to help you rebuild credit, make sure to research it thoroughly, to ensure its legitimacy.

How to tell if a credit repair company is a scam

One of the easiest ways to identify a scam credit repair company is if they violate Credit Repair Organizations Act (CROA) statutes. CROA is a federal law that aims to protect consumers against scams by setting guidelines for what credit repair services can and can’t do.

You’ll know a credit repair service is in violation of CROA if the company:

  • Charges you before performing any work on your behalf.
  • Promises or guarantees to remove negative data on your credit report — even when it’s accurate.
  • Asks or advises you to mislead credit bureaus about one or more of your accounts.
  • Tells you not to contact credit bureaus directly.
  • Suggests or implies that you change or alter your identity to modify your credit history.
  • Advises you to enter false information on credit or loan applications.
  • Doesn’t provide you with a written contract detailing the services it promises to deliver and the terms and conditions of payment.

If you encounter a credit repair service exhibiting any of the above red flags, you should probably look for a more reputable company or consider repairing your credit yourself. It’s important to note, even if you’ve already signed a contract, CROA provides you three days to cancel without charge.

You can also vet a credit repair service by searching the Consumer Financial Protection Bureau’s (CFPBs) database for complaints and reading company reviews on the Better Business Bureau website.

Do credit repair companies really work?

The best credit repair companies can often succeed in identifying and fixing factual inaccuracies and errors in your credit file. But no matter how many disputes a company files on your behalf, it’s unlikely that the credit bureaus will remove information your lenders accurately report.

“If a company says they can get accurate information off of your report, they’re not being truthful,” says Ricki Lowitz, co-founder and co-CEO of Working Credit, a nonprofit that offers credit building education and counseling services. “They may get accurate negative items removed, but only temporarily.”

It’s also worth pointing out that even the most reputable and trustworthy credit repair services can’t do anything you couldn’t do yourself. You can file disputes with the three major credit bureaus (Equifax, Experian and TransUnion) for free.

When you file disputes with these agencies, they must investigate the accuracy of your report’s negative items. If your creditor can’t prove the information is correct, the bureau can remove the information from your credit file.

Whether you repair your credit yourself or pay a service to do it for you, having a plan for repairing and maintaining your credit is essential.

How soon can I see results?

Credit bureaus have 30 days after the dispute is filed to investigate the claim, although in some cases it may take up to 45 days. After that, they have to notify you of their decision. If they do in fact find the items reported are inaccurate, you’ll see the results within the next month.

How to repair your credit yourself

If you have the time and inclination to repair your credit yourself you just have to follow a few steps.

Get current copies of your credit reports

The first step to repairing your credit is knowing what needs fixing. Your credit report contains all the positive and negative information impacting your credit score. Review your report to identify the negative items which may be hurting your score.

The law entitles you to a free credit report annually from each of the three credit bureaus. The most popular way to obtain your free credit report is through, a joint service from Experian, Equifax and TransUnion.

The law entitles you to free credit reports from each of the three credit bureaus each year.

Dispute errors on your credit report

Review each of your credit reports for mistakes, including:

  • Inaccurate personal data, such as aliases not attributable to you.
  • Incorrect dates or balance amounts.
  • Accounts that aren’t yours or duplicate accounts.
  • On-time payments wrongly reported as missing or late.
  • Collection accounts that don’t belong to you.

Dispute any errors you find directly with the three major credit bureaus. These agencies offer an online process to file disputes, which is often the fastest option to resolve an issue.

It’s also worth noting that if you do find a mistake, you’ll have to file a dispute with each individual credit bureau to get it removed. That’s because credit bureaus do not exchange information with one another, so for your credit score to improve with all three agencies, you’ll have to submit separate claims.

Make payment arrangements if necessary

Start your credit repair process by bringing your past-due balances current. The longer payments remain late, the worse the impact on your credit score.

Devise a plan that allows you to pay at least the minimum payment for all your accounts. You may need to work out a payment arrangement with your creditors to make it work, but there are no penalties for working out arrangements with your creditors.

Additional steps you need to take to improve your credit

Whether you pursue a DIY approach to credit repair or hire a company to do the work for you, it’s important to understand that credit repair goes beyond fixing mistakes.

“You can only go so far by disputing negative items,” Lowitz says. “The gains are usually small — especially if the item is old.”

Lowitz points out that to see a real difference in your credit score, you’ll have to take good care of your credit accounts.

Improve your payment history

Your payment history accounts for about 35 percent of your FICO credit score. Even one late or missed payment may cause your score to drop.

“A single 30-day delinquency on a loan or a credit card can lower your credit score that month by 100 to 125 points,” Lowitz says. “You can recover, but it can take between three and 12 months.”

If you have delinquent accounts, bring them current as soon as you can and continue to make your payments on time each month. Making regular payments before their due date is one of the most common ways to impact your credit scores positively.

Reduce your credit utilization ratio

The ratio of your outstanding credit card balances to your credit card limits is known as your credit utilization ratio. It measures how much of your available credit you are using. If the total of your credit card limits is $10,000 and your outstanding balances equal $2,500, your credit utilization ratio is 25 percent.

The lower your credit utilization ratio, the better your score should be. While credit experts generally recommend keeping your credit utilization ratio under 30 percent, FICO score high achievers tend to use less than 10 percent of their total available credit limit, according to FICO.

Seek credit counseling

If you’re struggling to pay off debt, consider getting help from a nonprofit credit counseling service. A reputable credit counselor can review your goals and help you devise a realistic plan to achieve them and restore your financial health.

Visit the Department of Justice website for a list of approved credit counseling agencies in your area.

The bottom line

There are legitimate credit repair companies that comply with CROA standards. That said, no company can legally do anything you couldn’t do yourself for free. Filing disputes with the credit bureaus and exercising good credit habits are the best ways to repair your credit.

If you want third-party help to address your credit issues, consider working with a nonprofit credit counseling service, which will likely provide more value than a credit repair company.