What Is Credit Repair?

Credit repair is the process of disputing incorrect and derogatory entries on a person’s credit report. Credit reports are produced by three main credit reporting agencies: TransUnion, Equifax, and Experian. These agencies get their information from creditors and public records. A credit repair company communicates with these agencies on a person’s behalf to remove the negative items from his or her credit reports.

Credit repair is important because landlords check credit reports as part of the rental application process. If you have positive credit, you’ll have a better chance of getting a better rental. Also, employers conduct soft credit checks when they review job applications. If they find negative items on your report, they may choose to pass on your application.

While you can dispute incorrect information on your own, it is often easier to hire a credit repair company than try to do it on your own. A reputable company will be able to remove items on your report. Having good credit helps you get approval for loans at lower interest rates. It’s important to note, though, that credit repair can’t remove all negative items from your credit report.

Consumers should take their time when choosing a credit repair company. The industry is highly regulated, and companies must abide by multiple federal laws. The Consumer Financial Protection Bureau (CFPB) oversees the credit repair industry and ensures that companies do not use predatory practices. If you’re concerned about a particular company, you can check the Better Business Bureau (BBB) complaint database.

A reputable credit repair company should coach their clients on how to handle their credit and won’t encourage them to lie to improve their credit scores. They should also carefully review your credit reports and dispute any errors or inaccuracies. For example, misspellings can mix negative and positive entries, making them appear mixed up in your credit report.

When selecting a credit repair company, you should consider the fee. Some companies may charge a one-time setup fee or an ongoing monthly fee. Others may charge as much as $400 for a six-month plan. You should be wary of companies that ask for more than one payment. If you decide to use a credit repair service, you should always check for a money-back guarantee.

A reputable credit repair company lists its prices and services clearly. The turnaround time should be reasonable and clients should be kept informed of any progress. Some companies offer other services such as budgeting software and identity theft protection. It’s a good idea to get quotes from a couple of reputable credit repair companies before making a decision.

Some credit repair agencies offer a 90-day money-back guarantee. Some of these companies also allow you to pause your membership and resume it later if you change your mind. You should also ask about the CROA certification of a credit repair company before signing anything.