Are Credit Repair Companies Worth It?

Paying a credit repair company is not worth it. Credit repair services can cost as much as $150 per month, and there is nothing they can do to clean up your credit and raise your score that you cannot do yourself.

Paying for credit repair help does have certain benefits, as you can see below. The list of cons is just longer. 

Pros of Credit Repair Services

They do the legwork. If you would rather not fix your credit yourself or just don’t have the time, credit repair companies can investigate items on your credit report for you and dispute any errors with the credit bureaus. This could potentially save you time and help you avoid the hassle of do-it-yourself credit repair if you are willing to pay. Still, it’s probably better to put that money toward paying off debt or building an emergency fund.  

You can get a credit assessment. Credit repair companies can walk you through why your credit is low and what you can do to fix it. However, you can get this information for free with WalletHub’s credit analysis feature.

Your credit score could go up. Credit repair companies can provide advice on what to do to improve your credit score. They can also file disputes for inaccurate information, which can increase your score if the errors get removed.

Cons of Credit Repair Services

They are very expensive. Using a credit repair company can be costly, with monthly fees reportedly ranging from $15 to $150, in addition to an initial setup fee. You can save a lot of money by opting to fix your credit yourself.

Results are not guaranteed. You are not guaranteed a specific outcome. The credit repair company can work with you to rebuild your credit, but your credit score may not go up to the level you were hoping for, or at all.  

You could fall victim to a scam. The credit repair industry is riddled with scammers preying on people looking to fix their credit. Some companies use unethical practices or take your money without providing any results. That’s why it’s important to research companies by reading reviews from customers and checking the companies’ ratings with consumer watchdog groups like the Better Business Bureau.

They can’t remove accurate negative information. If you are looking to remove accurate information that is hurting your credit, such as a bankruptcy filing or late payments, a credit repair company cannot help you with that. By law, accurate credit information cannot be removed from your credit report. So, if a company tells you they can remove that information, it is most likely a scam.

As you can see, the cons of paying a credit repair company to fix your credit outweigh the pros. It’s much more beneficial to fix your credit yourself than to hire someone else to do it. Below, we outline steps that you should take to fix your credit.

How to Fix Your Credit Yourself

Get Your Personalized Credit Analysis

You can check your credit score and get personalized credit-improvement tips for free here at WalletHub. You’ll see exactly what you need to fix, how to do it, and how long it will take you.

Dispute Errors on Your Credit Report

If you find any errors or inaccuracies on your credit report, file a dispute with the credit bureaus to have the information corrected or removed. You can do this online, by mail, or over the phone. The bureaus typically respond to dispute claims within 30 to 45 days.

Pay Your Bills on Time

Late payments can have a significant impact on your credit score, so make sure you pay all of your bills on time. Consider setting up automatic payments or reminders to help you stay on track.

Reduce Your Credit Utilization

Your credit utilization, or the amount of credit you're using compared to your credit limit, has a major effect on your score. Keep your utilization below 30% at all times to prevent further credit score damage. The ideal ratio is 1-10%.

Open New Credit Accounts, but Cautiously

While opening new credit accounts can help improve your utilization and credit mix, you don’t want to take out too much debt at once. Each time you apply for credit, it can result in a hard inquiry on your credit report, which can temporarily lower your score. Over time, however, having more available credit and keeping your utilization low will help your score.

Pay Off Debt

Paying down balances improves your credit by lowering your utilization, adding positive payment history to your credit reports, and reducing your total debt. Focus on paying off high-interest debt first because it will save you the most money in the long run, and consider debt consolidation or negotiating with creditors to lower your interest rates.

Learn more from WalletHub’s guide on how to fix your credit.