7 Best Credit Repair Companies of February 2022 | Smart Change: Personal Finance
Most companies have setup fees
Most credit repair companies charge an initial fee (also called setup or first work fee) that can range anywhere between $15 to $200. This fee is used to set up your account, which may involve gathering your personal and financial information and creating a strategy plan for your particular credit situation.
Credit repair companies can’t charge you in advance for their services
Once you pay the setup fee (if required), companies can’t make any additional charges unless they prove that the services offered to you in contract are being fulfilled.
Legitimate credit repair companies should include a copy of the Consumer Credit File Rights
Under the Credit Repair Organizations Act (CROA), credit repair companies must give you a written contract outlining their services before receiving any payment from you. The agencies must also give you a copy of the “Consumer Credit File Rights Under State and Federal Law,” a document that is meant to inform you of your right to order credit reports and dispute inaccurate information yourself.
You have the right to cancel any services without incurring any penalties within 3 business days
The CROA also states that you have the right to back out of a contract within three business days without any charges or cancellation fees. This is also stipulated by the Federal Trade Commission’s (FTC)’s Cooling-Off Rule.
Differences between debt settlement, credit repair and credit counseling
As we said above, there are different ways to repair your credit.
Debt settlement, credit repair and credit counseling are all in the personal finance sphere, but it’s important to note the key differences between the three methods.
|Debt settlement service||Credit repair service||Credit counseling service|
|For-profit service||For-profit service||Non-profit, but may charge a service fee|
|Resolves your debt and makes a deal to pay it off at a reduced amount||Identifies and repairs mistakes on your credit report||Provides debt and money management advice, but doesn’t renegotiate overall debt|
|Involves stopping debt payments until a settlement is reached.||Communicates with creditors and reporting bureaus to get mistakes corrected and removed from your credit report||Negotiates payment plans with creditors to protect you from debt collectors or late fees|
|Will impact credit negatively for up to 7 years||Improves credit by removing reporting mistakes||Improves credit with debt management plans|
|Hurts chances of getting loans or credit cards||Increases the possibility of being approved for loans and credit cards||Increases the possibility of being approved for loans and credit cards|
|Best as a last resort||Best for people who don’t have the time to repair their credit themselves||Best if you’re having trouble making payments and need some help|
Covid-19 and credit repair
Free credit reports
Experian, TransUnion, and Equifax are offering access to a free credit report weekly for the rest of 2022. Take advantage of this offer and check your reports for errors — if there are any, dispute them or consider hiring a credit repair company to do it for you.
Credit reporting errors during COVID-19
It’s important to watch out for erroneous “late payments” on your credit report — especially if you enrolled in a deferral program during the COVID-19 pandemic. Loan, mortgage or credit card payments shouldn’t be marked as late if your lender agreed to temporarily suspend them.
Contact your lender right away if you notice deferred payments are being incorrectly labeled as late on your report. If your lender doesn’t resolve the issue, contact the credit reporting agencies to begin a dispute process.
CARES Act protections
If you obtained a forbearance on a federally backed loan during the pandemic, these are some things to remember:
- Forbearance, payment deferrals or pauses will not show up on your credit report and will not bring down your credit score.
- Student loans are eligible for suspensions on loan payments, collections, defaults, and interest rates are set to zero until at least May 1, 2022.
How do credit repair companies work?
Each credit repair company has its own way of doing things, but most of them follow a four-step process:
The credit repair company will walk you through the process, pull your credit reports from all three bureaus and determine if you’d be a good candidate for credit repair.
Limited power of attorney and written consent
The company’s representatives will inform you if they find mistakes in your file. They’ll then send you a written contract giving them limited power of attorney, that is, the legal right to act on your behalf.
With your legal consent, the company goes on to dispute inaccuracies with your creditors and the major credit bureaus. Inaccurate items on your credit report can include tax liens or foreclosures that don’t belong to you, duplicate accounts, bankruptcies or outdated information.
Once they’re notified, credit reporting agencies must then investigate within 30 days of receiving the dispute. Once they confirm them as errors, they’ll remove them from your credit profile.
The best credit repair companies will track your disputes’ progress and update you frequently on the status of each disputed item. They will usually send progress reports along with an updated copy of your credit report so you can review the changes.
How to choose the right credit repair company
When evaluating credit repair companies, you should compare the services they offer and their upfront and monthly fees. Consider how many items they dispute per month and if they offer any additional perks such as free consultations or personal finance tools. You can also gauge a company’s reputation by reading online consumer reviews and checking whether it has any lawsuits against it.
Check for Credit Repair Organizations Act (CROA) compliance
CROA establishes clear directives that legitimate credit repair agencies should follow, and it’s important to ensure the company you choose is compliant in every step of the process.
Companies must provide a written contract explaining in detail the services they will provide, how long it will take for them to get results, any guarantees they offer and the total credit repair cost for their services.
You have the right to walk away without penalty within three days of signing the contract if it doesn’t meet your requirements.
Read customer reviews
Sources like Google Reviews, the Better Business Bureau (BBB) and Yelp are useful starting points in gauging customer experience. They each have their own way of evaluating and ranking companies — for example, the BBB uses an A to F grading system and Yelp offers its well-known star ratings.
These websites are helpful, but we recommend complementing what you read with further research — after all, most people post reviews when they’re unhappy with a service, not when they’re satisfied.
However, if you read multiple reviews alleging similar types of issues, you should certainly consider it a red flag.
In our search for the best credit restoration services, we focused on those that received mostly positive consumer feedback across multiple review websites.
Check the regulatory agencies
The credit repair industry is tightly regulated and must abide by the provisions of multiple federal laws aimed at the protection of consumers.
One of the agencies overseeing the industry is the Consumer Financial Protection Bureau (CFPB), a federal organization that protects consumers from fraudulent or predatory practices by banks, lenders or any type of financial institution — including credit repair companies.
When searching for the right credit repair company for you, it’s a good idea to check the CFPB complaint database and check how many complaints — if any — have been filed against it.
Compare fees and turnaround times
Reputable credit repair companies will list their prices and services clearly, so consumers can select the right package for their needs. Turnaround time should be reasonable, and the company must keep you updated about the progress.
Look for personal finance tools
Besides their standard credit repair services, some credit repair agencies offer personal finance tools like bill reminders, budgeting software and credit monitoring. Additionally, they may offer free credit consultations, satisfaction guarantees and identity theft protection services.
7 Warning Signs of a Credit Repair Scam
The credit repair industry has had its share of controversies and scams. It’s important to recognize the red flags indicating a company or agent you’re dealing with might be engaging in some questionable practices.
DIY Credit Repair
Credit repair companies are helpful if you can afford the service and don’t have the time to dispute the items. However, it’s important to note that you can fix credit issues yourself, and at no cost. There are also ways to improve your credit score without the help of a credit repair agency.
Under the Fair Credit Reporting Act (FRCA), you have the right to dispute any information you believe is inaccurate. Credit bureaus are required to investigate and delete it from your report if found to be erroneous.
To start checking for errors, you can request free credit reports from the three main credit bureaus — Equifax, Experian and TransUnion — at AnnualCreditReport.com. Once you examine your reports for any discrepancies, you can go to each bureau’s website and file an online dispute. They will investigate within 30 days and, if they confirm it’s a mistake, will delete the negative item from your report.
They might also delete items from your report if your debtor cannot validate the debt and is unable to provide evidence that it belongs to you.
Latest News on Credit Repair
- Fixing a bad credit history or building one from scratch can take time, but a few key steps can speed up the process. Check out our guide, How to Build Credit Fast, to help you build a solid credit history faster.
- Whether you’re shopping around for a mortgage, personal loan or a new credit card, having a solid credit score can get you lower interest rates. Here are some tips to help you increase your score and improve your financial health: 7 Steps to Improve Your Credit Score Right Now
Credit Repair FAQ
How to fix your credit
You can fix your credit on your own, but it will take time, effort and patience. Review each of your credit reports from Experian, TransUnion and Equifax for errors. If you find any, file a dispute with the credit bureau and contact your creditor. They are legally obligated to investigate and eliminate inaccurate information from your report, at no charge to you.
How much does credit repair cost?
Prices vary across credit repair agencies. However, companies typically charge around $20 to $150 per month, depending on the service package you choose. They may also charge a setup fee (also called initial or first work fee) that can cost up to $200.
How long does it take to repair credit?
The amount of time it takes to repair bad credit depends on how much inaccurate information your report contains. Some companies estimate that it can take up to six months to see an improvement in your score. However, if your report has few errors, the process might be faster as there will be fewer disputes to process.
What do credit repair companies do?
These companies analyze your credit reports from the three main credit bureaus, pinpointing inaccurate information that may be keeping you from a good credit score. If their analysts find errors, they’ll contact creditors and credit bureaus to dispute the negative items and have them removed. Some companies also offer personal finance tools and access to credit counselors.
How does credit repair work?
A credit repair company reviews your credit reports from the major credit bureaus for inaccuracies that may be impacting your credit score. It identifies accounts that don’t belong to you or payments incorrectly marked as late, for example, and disputes the errors by contacting the credit bureaus or creditors. If the information is incorrect or can’t be verified, the bureau is required to delete it.
How We Chose the Best Credit Repair Companies of 2022
The companies in our list are reputable credit repair services that have been around for over ten years and garner mostly positive customer reviews across different platforms. We looked for any history of Federal Trade Commission (FTC) violations and searched the Consumer Financial Protection Bureau (CFPB) Database to verify any history of customer complaints or enforcement actions.
A credit repair service assumes responsibility for writing dispute letters, communicating with lenders and credit bureaus and ensuring removal of each item. It helps if the standard service is complemented with other features. Multiple pricing options, additional financial tools, expert advice, and service guarantees helped companies stand out from the competition.
Pricing options and service guarantees
As we researched companies, we made sure that their pricing options were as varied as possible, and that their service guarantees were transparent with little to no fine print exceptions.