If you’re thinking about credit repair, there are five things you should look for in a credit repair company before signing up.
First, understand that credit repair companies cannot do anything that you cannot do yourself.
They’re popular because reputable credit repair services are experts that understand the law and have experience working with credit reporting agencies.
You pay them a fee for the convenience and their expertise, usually as one-time service fee and a subsequent monthly fee.
It’s important to understand that credit repair services don’t help you pay off debt, nor are they in the business of debt consolidation.
They also can’t likely wipe out all of the bad credit on your reports.
If you’re wondering, “How can a credit repair company fix my credit?” then keep reading.
Typically, credit repair agencies work by analyzing your credit reports from the three major reporting agencies: Experian, TransUnion, and Equifax.
They then target items on your credit report that may be incorrect, out of date, or lacking proper documentation.
A letter will then usually be sent challenging these items individually.
If the item is incorrect, has been incorrectly attributed to you, or the reporting company doesn’t have proper documentation, the line will be removed by the credit reporting agency.
While these are the basics of credit repair, each agency may handle your account differently.
Charges and services also vary among credit repair companies.
Below is a list of five things you should look out for before signing up, as well as some recommendations for reputable agencies that can help repair your credit.
Understanding the Cost of Credit Repair
Credit repair isn’t expensive, but there are costs involved.
Credit repair agencies usually charge a setup fee and a monthly fee for their services.
One thing to look out for when searching for a reputable credit repair firm is an upfront fee.
The Credit Repair Organizations Act (CROA), signed into law in 1996, forbids credit repair agencies from demanding advance payment.
Costs vary from company to company, but expect upfront service fees to be around $20 to $100.
Monthly costs should be expected to be about $60 to $100, but additional services can make it higher.
You Should Never Sign a Written Contract
CROA also protects consumers in a few other ways.
It gives you certain rights to be able to cancel services and states that companies may not force you into a written contract.
When looking for a company to help you with your bad credit, look for a reputable agency that allows you to cancel at any time.
There should never be a case where you are locked into a contract or unable to cancel.
Be Wary of Credit Repair Companies That Offer a Guarantee
Credit repair services should work hard to repair your bad credit, but they shouldn’t offer a guarantee of results.
The federal Fair Credit Reporting Act (FCRA) gives you the right to challenge items on your credit report, and credit repair agencies use this and other laws to serve you and protect your rights.
However, if the report is accurate, verifiable, and timely then there may be nothing anyone can do to have an item removed from your report.
Any company that promises to have an item removed or promises to improve your credit is over-promising and shouldn’t be considered reputable.
Don’t Let Anyone Pressure You to Do Anything Illegal
Reputable credit repair agencies work within the law to protect your rights and improve your credit.
A reputable agency would never ask you to do anything illegal.
Be wary of companies that ask you to open lines of credit using false information.
Creating a new credit identity runs afoul of many federal laws and can get you into a lot of hot water.
Any company that asks you to do so is not only disreputable, but downright criminal.
Credit Repair Agencies Should Have a Track Record of Success
Credit repair agencies should have a proven track record of success.
While they can’t offer you a guarantee that they can fix your credit, they should demonstrate past success with clients.
When deciding to work with a particular credit repair agency, look at their track record, talk with friends, and read reviews.
You should also be able to contact them directly to discuss their process and their success rate.
With that in mind, here are three credit repair agencies that we consider reputable, honest, and fair.
Lexington Law is a large group of lawyers and paralegals that have been helping customers repair their credit since 1992.
Lexington Law’s Concord Standard service costs $89.95 to set up and $89.95 per month.
Couples, family members, and members of the armed forces are eligible for a $50 discount.
With their Concord Standard program, Lexington Law challenges credit bureaus to have incorrect or misfiled information removed from your credit report.
CreditRepair.com offers not only credit repair, but credit monitoring as well.
The setup cost is just $14.95 and they charge $99.95 per month.
While the set up fee is one of the lowest in the industry, their monthly fee seems to be a bit high at first glance.
However, when you consider that they include credit monitoring from their partnership with TransUnion, it really is a bargain.
Plus, CreditRepair.com has over 20 years of experience to stand behind.
For those that are not fans of monthly fees, The Credit People offer you the option to pay up-front.
Setup fees are $19.95 no matter which plan you choose.
You can choose to pay $69 per month, one of the least expensive options of any company, or you may choose to pay a flat fee of $299 for six months of service.
If you pay up-front, which is not required by law, The Credit People will also waive the $19.95 setup fee.
Other Options for Credit Rescue
Credit counseling and repair services are just one step consumers can take towards better financial health, but there are other alternatives too.
Some people with overwhelming credit card debt find relief by consolidating debt with a personal loan.
The right loan will offer a lower APR than your credit card debts, and with one loan payment to make each month vs. multiple credit card balances, it’s not hard to see why this is an appealing option.
Of course, to get that low APR rate, you’ll have to shop around different lenders to see who can get you the best deal.
LendGenius.com makes loan comparison a no-brainer, try it for free to see for yourself what’s out there: