Your credit is an important part of your finances. That is why it is important to handle it with care. Unfortunately, not everyone can properly handle their credit (sometimes due to no fault of their own). When your credit gets to a point where you feel like it needs help, you may turn to options like a credit repair company.
But are credit repair companies legit? Can they actually help your situation? You may be surprised to find out just what these companies can do for you.
And in this quick article, we’ll take a look at the pros and cons of hiring a credit repair firm to determine if this is the right approach for you. First, what exactly is a credit repair company?
What is a Credit Repair Company?
Credit repair companies are a third party agency that aims to remove information from your credit report in exchange for a payment. These credit repair companies advertise that they can help people remove unverifiable or inaccurate information from their credit report.
Not every credit repair company is the same but generally the company will start the credit repair process by getting a copy of your credit report from the three major credit bureaus (Experian, Transunion, and Equifax). From there, they will analyze the report to look for negative marks like collections, bankruptcies, etc.
Once they get together a list of all the negative marks they can begin making a plan for how they want to dispute or negotiate the errors. Again, it is important to keep in mind that every credit repair agency is different. However, credit repair services include:
- Requesting Validation Information
- Submitting Dispute Letters
- Handling Debt Collectors
- Recommending Credit Applications
You need to confirm the cost of credit repair based on the credit repair companies in your area. However, you can typically expect them to charge in two ways. They will either offer a pay-per-delete model or subscription-based model.
The more popular payment model is subscription-based and usually ranges from $50 to $150 a month depending on the services you get. These monthly fees will also generally require start up fees of up to $150. This can lead you to spend a lot of money on credit repair, especially if you use their services for months.
Want to learn more about the basics of the credit repair industry? Learn if credit repair will work for you, when to repair credit, credit repair for veterans, or credit repair vs debt consolidation in our blog. For now, let’s address the question you came here with – are credit repair companies legitimate?
Are Credit Repair Companies Legit?
Knowing how much credit repair services costs, it makes sense to question if the investment is one you should make. This begs the question – are credit repair companies legit?
While the service of credit repair is legit, the companies that offer this service may not be. There are plenty of legal and reputable credit repair companies but there are also scam companies as well. The credit repair industry is no stranger to scams. To help you avoid these types of companies, we’ve put together a litmus test you can use when searching for services in your area.
How to Tell if Credit Repair Companies are Legit
Just as with any financial service you pay for, you want to make sure you’re spending your money with companies that deliver a result. The last thing you want is to fall victim to a credit repair scam. So, look for legitimate credit repair companies by taking these factors below into account:
Their Payment Model
A company should have a payment model that makes sense. Whether their payment model is subscription-based or on a pay-for-delete basis, they should keep the consumer in mind. You shouldn’t be making payments for services you didn’t receive yet.
Under the CROA (more on that down below), credit repair companies are required by law to inform you of your legal rights. This includes your ability to dispute and handle the credit repair process yourself.
You want to make sure the credit repair company you choose handles your credit repair honestly. They shouldn’t be making any false guarantees. It is illegal to do so! If the company you are considering makes any promises then they aren’t legit.
Any legit company will provide a consumer with a written contract. These contracts will detail the nature of the services and a consumer’s legal rights during the process. Written contracts are a great way to spot a legit company.
What are Some of the Most Legitimate Credit Repair Companies Right Now?
Now, you can take the information above and go out and find credit repair services near you. OR, you can take our advice on what we believe the best credit repair companies are. There are plenty of legitimate credit repair companies out there, but we have compiled a list of the top 6 that you may want to consider.
This credit repair company is a great option for people to consider because they have perks like a 90-day money-back guarantee, different plans for different budgets, easy-to-understand pricing, and easy online sign-up. However, this company does have some drawbacks to be aware of since they have limited availability, expensive first work fees that range between $99 to $195, and no online chat options available.
Sky Blue Credit
Sky Blue Credit is another great option to consider when it comes to credit repair. They offer a no condition 90-day money-back guarantee, offer 50% discounts, repair up to 15 items every 35 days, and have easy to use online sign-up available. However, some people think the drawbacks may be worse than the benefits since they don’t offer credit monitoring, financial tools, and have limits on monthly disputes.
Ovation Credit Repair
A credit repair company that deserves a standing ovation is Ovation Credit Repair. This company is popular amongst consumers because they have a variety of discounts available, give users the chance to cancel whenever, provide financial management tools, and work with companies that have a good reputation like Lending Tree. However, while there are pros, there are cons as well. Some cons include limited credit monitoring available, a phone-only application process, and no around the clock support.
The Credit Pros
This credit repair company is a fan favorite due to benefits like available financial management tools, available live chat assistance, certified FICO professional staff members, and no setup fee! However, people who like 24/7 phone support will not be happy with this company since it isn’t an option.
The Credit People
Benefits of this credit repair company include the fact that they have a simple pricing structure, use FCRA-certified consultants, have a low first work fee of $19, and allow online enrollment with around the clock account access. However, they don’t offer credit monitoring or other financial tools.
This is a popular credit repair company that is liked by consumers for their long track record, online contact opportunities, legal staff and free consultation opportunities. However, even though many people like this option, others don’t due to how the plans are set up, the fact that there’s no satisfaction guarantee, and past legal trouble with the CFPB.
This credit repair company is a little different than a traditional option. They use AI software to review your credit report in order to find negative marks. From there, they will automatically dispute letters on your behalf. They help you understand what’s going on with an easy to view dashboard! You can get this service with a monthly plan that also features identity theft insurance.
Once these dispute letters are created, you can mail them in yourself. There are no credit experts to help you, no money-back guarantee, and no credit consultations available. Everything is automated and you basically do it all on your own. That is why this credit repair company may not be a good fit for every user but can be beneficial for those who want help doing it on their own.
What Protections Do Consumers Have From Illegitamte Credit Repair Companies?
If you don’t follow our advice and you end up with a poor credit repair service, it can feel awful. Fortunately, there are plenty of protections and helpful sources that are available for credit repair. Three important protections are:
- Credit Repair Organizations Act (CROA)
- Fair Credit Reporting Act (FCRA)
- Consumer Financial Protection Bureau (CFPB)
Credit Repair Organizations Act (CROA)
As mentioned above, the CROA is an act that aims to protect consumers against credit repair companies. The CROA can help prevent misleading advertisements that don’t accurately portray the services being offered. There are plenty of protections when it comes to this act. Some behavior that the CROA prohibits credit repair companies from doing includes:
- Making false statements about credit scores and their services.
- Changing your identity in order to remove negative information.
- Engaging in fraudulent behavior.
- Charging fees in advance.
Fair Credit Reporting Act (FCRA)
Even though this act isn’t directly related to credit repair, it is a part of the process. Credit repair companies can dispute claims with the credit bureaus. Under the FCRA, credit bureaus are required to report only accurate and verifiable information on a credit report. Credit repair companies take advantage of this during the dispute process. Some legislation from the FCRA that impacts credit repair includes:
- Credit reporting agencies (CRAs) must accept disputes for free.
- CRAs have to respond within 30 days. If there is any follow up then they are granted 15 extra days to respond.
- They must verify information with the original provider of the dispute within 5 business days.
- A credit bureau can terminate a dispute if it is considered irrelevant, invalid, or frivolous.
- If they decide to terminate the dispute then they need to let you know within 5 business days.
- If the mark in question cannot be verified then it must be removed from the credit report.
- A credit bureau will need to provide a free copy of your credit report to verify the negative mark is gone.
Consumer Financial Protection Bureau (CFPB)
The CFPB is a bureau that oversees financial services and products that are available to people. This bureau is a type of regulatory agency and their goal is to help educate consumers about different types of available financial products while also offering protection. There are different branches of the bureau and they each work together with that same goal in mind!
Are Credit Repair Companies Legit? Wrapping Things Up
So, are credit repair companies legit? As you can see, there are many legitimate credit repair companies out there. the trick is just finding the right one for you. And since we’ve shared the best credit repair companies with you today, that’s going to be very easy!
If you feel your credit is unmanageable then you may turn to credit repair services as a way to regain control. However, credit repair companies are not a guaranteed fix, and can end up costing you hundreds of dollars in the end with no results.
These companies also don’t do any magic when it comes to your credit report. You can handle the dispute process all on your own if you want. Another alternative to credit repair is getting help from a credit counseling agency. Regardless of what you decide, your credit situation may not be as stressful as it feels.
Want to learn more about credit repair? We have a plethora of great resources for you in our blog. If you’re wondering – can credit repair companies remove collections – we have an article on that. You can also learn about how to do a credit sweep, removing late payments with credit repair, credit repair vs credit restoration, credit repair vs credit counseling, and removing inquiries with credit repair.