How Does Credit Repair Work and Can It Fix Bad Credit?
Written by
Andrew Lisa
Edited by
Nupur Gambhir
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Credit repair is the process of correcting errors and eliminating inaccurate derogatory marks on your credit report, either by yourself or with the help of a company that specializes in it.
However, some credit repair companies have a reputation for over-promising and misrepresenting the limits of their abilities.
This guide will walk you through the process, lay out your options and give you an unbiased assessment of what credit repair can and cannot accomplish on your quest to improve your all-important credit score.
What Is Credit Repair?
Credit repair means fixing errors or negative marks on your credit report. It involves:
- Disputing wrong information
- Negotiating with creditors
- Adding positive accounts to balance out bad ones
Credit repair can be done on your own for free or by hiring a credit repair company for a fee.
What Types of Issues Can Credit Repair Fix?
Credit repair can be a useful way to clean up your report and boost your score by finding and fixing:
- Incorrect late payments
- Accounts you didn’t open but exist as a result of fraud or identity theft
- Duplicate accounts or any account listed more than once
- Incorrect balances or credit limits
- Old negative items that should have been removed, like collections that are more than seven years old
Important: Credit repair cannot remove accurate negative information. Don’t believe any company or person who makes such a claim.
How Does DIY Credit Repair Work?
Most people can handle credit repair on their own with a bit of effort, rather than paying a company to do the same work. Take the following five steps to repair your credit on your own.
- Step 1: Get free copies of your credit report.
- Step 2: Review your reports and highlight any errors.
- Step 3: Dispute errors with each credit bureau that reports the mistake.
- Step 4: The credit bureau must investigate within 30 days and remove any wrong information.
- Step 5: Follow up and check your report to make sure the mistake was fixed.
How Do Credit Repair Companies Work?
Credit repair companies follow a similar process to DIY repair, but they handle the disputes and communication for you by crafting and sending:
- Dispute letters to credit bureaus
- Goodwill letters asking creditors to remove settled or paid-off accounts
- Requests for debt validation if a debt collector is reporting the account
Important: Credit repair companies charge fees, which can range from $50 to $150 per month.
Credit Repair vs. Credit Counseling
Some people mistakenly use the terms “credit repair” and “credit counseling” interchangeably, but they are distinct services designed for individuals with different needs.
| Feature | Credit Repair | Credit Counseling |
|---|---|---|
| Goal | Fix errors on your credit report | Teach you how to manage money and debt |
| Cost | Often charges fees | Usually free or low cost |
| Focus | Removing negative items | Helping you budget and repay debt |
| Best for | Fixing credit report problems | Learning to manage money long-term |
Tip: If your problem is too much debt, credit counseling may be a better fit than credit repair.
What Credit Repair Can’t Do
Even the best credit repair companies have limitations on what they can do and must work within the boundaries of the Fair Credit Reporting Act and other laws, rules and regulations. Don’t work with anyone who claims to perform any of the following services, which none can:
- Remove accurate negative information like real late payments
- Guarantee a specific credit score increase
- Erase bankruptcy before the legal time limit of seven to 10 years
- Remove accounts you legally owe without paying or settling the debt
Tip: Be careful of scams — if a company promises to delete everything negative, that’s a red flag.
How Long Does Credit Repair Take?
Each case will follow its own unique timeline, but keep the following in mind.
- Each credit bureau has 30 days to investigate disputes.
- If errors are removed, you could see a credit score increase within a month.
- If you have many errors, full repair could take several months.
Important: Fixing errors is only part of building better credit — you also need to build positive payment history over time.
FAQ
-
What does credit repair actually do?
- Credit repair removes mistakes and inaccurate derogatory marks from your credit report, which can increase your score and improve your overall credit health.
-
Is credit repair legal?
- Yes, but there are legal limits on what an individual or credit repair company can accomplish.
-
Can I repair my credit on my own?
- Yes, credit repair companies don’t have any access or tools that individuals don't have. Nearly anyone can DIY their own credit repair, but a company might have the skills and experience to improve their chances of success and craft more compelling requests and letters.
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How much does professional credit repair cost?
- Credit repair companies typically charge subscription fees of $50 to $150 per month.
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Does credit repair really work?
- Credit repair is not a cure-all. It can’t fix bad credit and it is not a guaranteed solution, but it can improve your credit report and boost your score by addressing inaccuracies and petitioning lenders and creditors for favorable treatment.
