Credit repair cannot erase your outstanding debt from your credit record. Instead, credit repair companies work closely with credit bureaus, banks, debt collectors, and financial companies to correct your credit reports.
And frankly, all the things a credit repair company can do are the things you can do by yourself. Anyone struggling with bad credit has come across credit repair companies that take advantage of their need to build a good credit score.
Unlike credit counseling companies that help you manage your finances, credit repair companies such as Lexington Law Firm help you dispute entries on your credit reports. The best you can get from a repair company is their service to help negative information removed from your credit entries.
What Do Credit Repair Companies Do?
The Credit Repair Organizations Act (CROA) dictates you can request investigations of items listed on your credit reports. However, following up with credit bureaus in this manner can be time-consuming. Therefore, you can hire credit repair companies such as Lexington Law Firm to help you with this process at a cost.
When referring to credit repair or fix, people often think that the company removes negative information from your report. Credit repair companies do not have a backchannel to have accurate information removed. With that said, the Consumer Credit Laws protect you from credit repair companies doing the following:
- Falsifying their services
- Charging you before they deliver their services
- Performing any service without your consent
- Misleading you about, or attempting to alter your credit history
How Credit Repair Companies Work
Credit repair companies like iMax Credit Repair start by requesting your credit report to assess information such as tax liens, bankruptcies, and charge-offs. Depending on the information they find, they dispute the errors by sending a request for validation.
They then send a letter to dispute the erroneous negative marks in the report. According to Lexington Law reviews (a credit repair company), they can be effective when faulty information is present.
Cost of Credit Repair
Credit repair companies are for-profit organizations according to the Credit Repair Organizations Act (CROA). You must pay for the services you receive for the companies to repair your credit report to improve your credit score.
While some charge a monthly subscription fee, others charge for every entry they have deleted. You may part with around $75 monthly for using credit repair services. However, the cost varies from one company to another. It is easy for the fee to potentially add up to hundreds of dollars with such varying costs.
Do It Yourself
As we mentioned above, however, you can repair your credit reports for free if you can access the right resources. Begin the process by obtaining a copy of your credit report at AnnualCreditReport.com for free. Review the reports for inaccurate items you can dispute.
Remember, the Fair Credit Reporting Act gives you the right to dispute and have inaccurate information deleted from your credit reports. You can find the dispute process online for free. Make routine credit checks to ensure that your report remains accurate more often. Request multiple reports from different credit bureaus every 12 months and review them periodically.
On the Bottom Line
An accurate credit report can improve your credit score when bad information is dragging down your rating. So, do credit repair companies really fix your credit? Yes, they do when there’s something to fix. But they cannot make negative information go away if it’s accurate. The only way to fix that is to work with your creditors to clear up the problem and ask them to revise your report once you’ve done so.