Should You Use Credit Repair Services?

Credit repair services find and address errors that could be hurting your credit scores. You can also fix your credit for free.

Bev O'SheaNov 12, 2020
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Credit repair removes information that shouldn’t be on your credit reports, so it will stop dragging down your credit scores.

However, it can't remove negative marks if the information is accurate, timely and verifiable.

You can hire credit repair services — for around $100 a month — to handle these tasks to help you rebuild credit. But everything a service does, you can also do on your own.

When is credit repair useful?

Credit repair can be useful when you can afford your monthly bills but a poor credit score is keeping you from qualifying for a credit product, such as a mortgage or a car loan, or is causing you to pay high interest rates.

How credit repair can help your credit scores

Your credit scores are calculated from information in your credit reports. A Federal Trade Commission study found about 5% of consumers had errors on their credit reports that could significantly lower their scores.

That's why it pays to check and fix your reports. Through April 2022, you’re entitled to free weekly credit reports from the three major credit reporting bureaus — Experian, Equifax and TransUnion — by using In addition, NerdWallet gives you free access to your TransUnion report.

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Legitimate credit repair services check your reports for information that shouldn't be there and dispute it on your behalf. Many of them also check to be sure the information does not reappear. Sometimes information that's accurate but cannot be substantiated also has to be removed, although it may be reinstated if it's verified later. An example might be a debt to a retailer that is now out of business (unless it sold the debt to a collection agency that can show ownership).

Among the errors that can be addressed:

  • Accounts that do not belong to you.

  • Bankruptcy or other legal actions that were not yours.

  • Misspellings, which may mix in negative entries that belong to someone with a similar name — or may mean positive entries aren't showing up when they should.

  • Negative marks that are too old to be included.

  • Debts that can't be validated and verified.

You pay a monthly fee to the credit repair service, typically between $79 and $129, and the process may take several months to a year. You may pay a setup fee to begin, as well. Some credit repair services argue you may save as much as repair costs — or more — because of the lower interest rates you’ll qualify for with higher credit scores.

It is true that lower rates go to borrowers with higher scores. But it is also true that you can handle credit repair yourself.

How to fix problems yourself

You can opt to fix errors on your own, provided you have the time and willingness to do so. Here's how:

  • Dispute errors on your credit reports: As a consumer, you can dispute errors on your credit reports directly with the three major credit bureaus. All three bureaus have an online dispute process, which is often the fastest way to fix a problem.

  • Work on your payment history: Your record of paying bills on time is the most important factor affecting your credit score. If you have late or missed payments, that can drag down your score. Bring a late account current as soon you can and then consider writing a goodwill letter asking your creditor to remove the mark from your credit reports.

  • Use less of your available credit: How much of your available credit card limit you're using is known as your credit utilization ratio. The lower it is, the better for your score. If you can afford to, consider making multiple small payments in a billing cycle to keep this ratio down and help your score.

How to choose reputable credit repair services

Hiring a credit repair service is not quite as simple as outsourcing a job like mowing the lawn. Although there are some legitimate companies, the credit repair business is known for scams.

A credit repair company does not have any rights that you don’t in disputing information on your credit reports. The FTC warns against using credit repair services that guarantee they can remove negative information that's accurate or say they can help you establish a new identity using a credit privacy number.

Just as laws protect you from unfair reporting and collections, there are laws to protect you from credit repair services that mislead.

The Credit Repair Organizations Act requires companies to give you a three-day right to cancel without charge, a firm total on costs and an estimate of how long it will take to get results.

A reputable company should also coach you on how to handle your existing credit accounts in order to avoid further damage. If, for example, your cards are nearly maxed out, it should advise you to pay those balances down.

Whether you’re repairing your own credit or paying someone to do it for you, have a plan for building and maintaining your credit.