Key takeaways

  • If you have bad credit, you can work with a credit repair company to improve it.
  • Credit repair companies help you dispute inaccurate information on your credit reports.
  • Fees vary based on the company you work with.
  • You can do everything that a credit repair company does on your own, so it may not be worth it for everyone.

If you have bad credit, you may be looking for ways to improve your credit. After all, over 15 percent of Americans have a credit score of 599 or less, according to FICO. Credit repair involves integrating good habits into handling debt and looking for any inaccuracies in your credit report. 

While this can be a lot of work, there are companies that can help. Credit repair companies can help dispute untrue negative claims in your credit report in exchange for a fee. Not all credit repair agencies are the same, though. It’s important to understand what a credit repair company can and can’t do before you sign a contract with one. 

What is a credit repair company?

A credit repair company is any company that offers to help consumers repair bad credit in exchange for a fee. Repairing your credit typically involves a company communicating on your behalf with credit bureaus or companies who reported your credit to these bureaus. They encourage the credit bureaus to either get rid of inaccurate information or modify items in your report, so that they improve your credit score. 

“Think of a credit repair company like you’d think of a tax preparer. Sure, you can do your own income taxes, but sometimes it’s worth the money to hire a professional,” says Howard Dvorkin, CPA and chairman of

How does credit repair work?

When a credit repair company takes on your case, they aren’t doing anything you couldn’t do yourself. They are trying to get credit bureaus or furnishers to change or remove items from your credit report to make it more favorable for you. The credit repair company will send multiple letters, make phone calls or send emails in order to do so. 

Here’s what the process might look like.

  • Obtain your credit report from the major credit bureaus.
  • Look through your credit history for incomplete or inaccurate information.
  • Contact the credit bureau or organization that put out the inaccurate credit info to ask them to remove the inaccurate information or correct it.
  • Continue this process with all inaccuracies until all inaccurate information is removed. 

How long does credit repair take?

The length of time it takes to repair your credit depends on the extent of damage. If your credit history is mostly good, getting a few incorrect items from your report could take just a few months. 

But, if you have a generally poor credit history, you will need to do more than remove a few inaccurate items from your report in order to improve your credit. Repairing credit in this case will require you to change your spending habits and the ways you manage your debt. 

Making timely payments on any debt you have and diversifying your types of credit utilization will help improve your credit over time. This can take as long as a few years to have an effect on your credit, depending on the shape your credit score is in at the start. 

How to find a legit credit repair company?

When you’re looking for a credit repair company, you will likely encounter some scams. Follow these tips to find a legitimate credit repair company.

  • Know what credit repair companies are allowed to do. The Federal Trade Commission (FTC) created the Credit Repair Organizations Act to regulate credit repair companies. Credit repair organizations aren’t allowed to lie to you about what they can do or ask for payment before providing services.
  • Watch out for red flags. You need a contract before you start working with a credit repair organization. Any legitimate company should follow the regulations provided by the FTC. If these things don’t happen, it’s best to look for a different credit repair company. 
  • Don’t pay for credit repair services without results. Any credit repair company that asks for payment upfront is doing something illegal. This kind of shady behavior should be reported to the FTC. 
  • Do your research. Read through reviews on the Better Business Bureau (BBB) or Google. If the company has a poor BBB rating or the majority of reviews are negative, it might be best to look for a different credit repair company. 
  • When is using a credit repair company a good idea?

While you can work to repair your credit on your own, it can take a lot of work. So when should you hire a credit repair company?

“Disputing lots of negative items can be hard,” Dvorkin says. “In my three decades as a financial counselor, I’ve learned that debt is so overwhelming, too many people just don’t have the brain space to do one more thing – even if it will save them hundreds of dollars and bump up their credit score.”

If you know you need to improve your credit, but you don’t have the capacity to do the work yourself, you may want to think about working with a credit repair company. However, if repairing your credit won’t take much time, consider doing it yourself and saving some money. 

Alternatives to using a credit repair company?

Using a credit repair company isn’t the only option for improving your credit. You may also want to consider alternatives.

  • Do it yourself. Anything a credit repair company does, you can do yourself. While it may take extra time, you will save yourself the money it takes to hire a credit repair company. 
  • Improve your payment history. Making timely payments on your debt over time will increase your credit score. It may not be the fastest method, but it doesn’t take too long to start seeing results. 
  • Work with a credit counselor. Most credit counseling agencies are non-profits, so they don’t usually cost much. A credit counselor can give you advice to help you manage your finances well, including how to improve your credit. 

Bottom Line

Having bad credit can make it difficult to get a loan or rent a place to live. However, repairing your credit can give momentum toward a better credit score. Using a credit repair company gives you an assistant in improving your credit. Yet, credit repair companies cost money and you can do everything they do on your own. 

Before you sign up to work with a credit repair company, consider the cost and understand your alternatives. Talk to a credit counselor before making any big decisions. You may be able to repair your credit on your own for free.