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Credit Repair

Credit Repair Service – Yes or No?

By Guest Blogger | Wednesday May 13th, 2015

By Kimberly Rotter

Credit repair services offer to help consumers raise their credit scores for a fee. They are perfectly legal. Anyone whose credit application has been turned down because of poor credit understands the attraction of the promises they make, but most personal finance experts and consumer advocates advise against it.


Top 3 Complaints Voiced by Real Customers

Credit repair services are not inherently evil, and we won’t call out any in particular as bad. Credit Card Insider will not disparage any legitimate company in the credit industry. However, our goal is to bring knowledge to our readers, and to that end we firmly advocate for consumer education.

The most common complaints from real people who feel duped fall into three categories.


Startup costs of $50 to $100 and monthly recurring costs at similar levels. Costs are particularly disturbing when immediate progress is not achieved.

Solution: Try doing it yourself for free first.

Hard to Cancel

Many, many customers complain about auto-pay problems. This problem is generally rooted in a lack of understanding of either the payment contract or the cancellation policy or both.

Solution: Read your contract. Even when your cancellation is timely, you may have to pay one more bill. That’s because legitimate companies bill for services already rendered in order to comply with the law that prohibits upfront fees.

No Debt Settlement

Credit repair is not the same thing as debt settlement. Some consumers mistakenly believe that the credit repair service will get collections off their back or negotiate debt.

Solution: Again, read the contract and understand what the service is offering to do in exchange for the fees you pay. Some credit repair services also offer debt settlement, but it is a separate service.

Positive Feedback is Out There, Too

As in any other industry, negative reviews are much louder and more prevalent than positive reviews. However, many consumers report satisfactory or excellent experiences with paid credit repair, including credit score improvement in as little as three months. These consumers tend to be people who (A) understand the terms of their contract, and (B) are not inclined, for whatever reason, to do the cleanup work themselves. Often, they also understand, at least at a basic level, steps they can take to improve their own score.

What a Credit Repair Service Can Do

  1. Correct errors on the credit report

In 2013, major news outlets reported that 5% of consumers in the U.S. have errors on their credit reports that are serious enough to affect their overall credit rating. That means about 12 million adults in the U.S. could be denied credit or offered less favorable terms unjustly. Credit repair services take the necessary steps to initiate the removal of credit report errors.

  1. Dispute negative items

Every item on a consumer’s credit report must, by law, be verifiable. Some creditors who are no longer in business or who lack the infrastructure to respond in a timely manner will not verify a negative item within the 30-day time period allowed for response. For this reason, a credit repair service might dispute all or most negative items on the report, whether accurate or not.

  1. Negotiate with some Creditors for a less negative report

Some creditors might be willing to negotiate, for example to remove a negative item in exchange for payoff, or to reset the account to current rather than late. Some credit repair companies with experience know which creditors are approachable and under what conditions, and they may have negotiation strategies the consumer hasn’t considered.

Some credit repair services will also take legal action against creditors or collections firms whose reporting or collection practices violate the law.

What a Credit Repair Service Can’t Do

A credit repair service can’t do anything a consumer can’t do him- or herself. A consumer can perform every credit repair task under the sun for no out of pocket cost whatsoever. This is the main reason consumer advocates urge consumers to educate themselves for free rather than pay a service they hope will wave some kind of magic wand. Furthermore, a credit repair service cannot guarantee any outcome. They can only promise to legitimately do their job.

So why pay a credit repair service at all? Some consumers believe that the repair service is more effective than the consumer. Others are overwhelmed by the process. Still others simply don’t have the time or energy to dedicate to addressing the credit report problems themselves.

Consumers interested in credit repair must perform due diligence and research the prospective service thoroughly. Look for a company that’s been around a while and has a good reputation. Check reviews on the Better Business Bureau’s website and other sites that are not affiliated with the service you’re considering. Read any service contract carefully. Review the FTC’s website for signs of a scam, including any company that asks you to pay for services upfront or suggests that you should apply for a new social security number. The FTC also gives valuable information about your credit rights, instructions for reporting fraud and tips for handling credit repair yourself.

A few more important points to remember:

There is no trick or secret to raising your credit score.

Even if a credit repair company claims to be “nonprofit,” that doesn’t mean they are a consumer advocate or that you’ll get a better deal.

Consumers have the right to dispute errors, but not negative items that are accurate. Bombarding the credit bureau with disputes over accurate negative items is a tactic that is at the very least unethical.

Any consumer who has poor credit should strive for knowledge and understanding, not a quick fix, or his credit score will not stay high.

Consumers with poor credit are likely to be those who can least afford this service.

This post originally appeared on

Kimberly Rotter is a debt management expert and personal finance writer. She is a regular featured contributor on Credit Card Insider, Credit Sesame, Investopedia, and Her work has appeared on numerous other personal finance websites including Yahoo! Finance, LearnVest, Business Insider, and GoBankingRates.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.