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How Much Does Credit Repair Cost?
By Bianca Rodríguez Rojas MONEY RESEARCH COLLECTIVE
Credit repair companies charge a subscription that can range from $50 to $150 or more.
Additionally, many companies also charge a setup fee that is often around the same price as the subscription – $50 to $150. These costs can add up quickly, especially if your situation is complex and takes several months to resolve.
You can repair credit yourself. However, if you’re considering hiring a credit repair service, it’s important to evaluate the costs, time and how to get it done. Below, we’ll go over how much credit repair costs to help you determine if paying for the service is a smart investment for you.
How Much Do Credit Repair Companies Charge?
Credit repair companies often charge a subscription between $50 and $150 per month. This price covers services such as contacting the bureaus and disputing inaccurate information on your credit report to have it removed.
Some credit repair services also require customers to pay a setup fee of around $50 to $150 for gathering your personal information and creating a strategy to tackle your credit situation. Additionally, companies offer discounts for couples, which could be as much as 50% depending on the company.
Keep in mind that, per the Credit Repair Organizations Act (CROA), it’s illegal for companies to charge you before providing any services. It is, therefore, a violation of federal law if a service provider asks you for an upfront payment without providing services.
How Long Does Credit Repair Take?
How long it takes to fix your credit will depend on your situation. It can take 30 days or less for individuals who dispute accounts that don’t belong to them or other errors in their credit file.
Under the Fair Credit Reporting Act (FCRA), once you or the credit repair company files a dispute, credit bureaus are required to investigate your claim and remove errors within 30 days. After this process is complete, bureaus update your credit report.
However, it generally takes three to six months to see significant improvement when all the accounts in your credit history are accurate. In this case, you have to start making consistent, on-time payments to repair your credit. Consistent payments over the course of three to six months will positively affect your credit history because new information in your report carries more weight than old information.
Note that if you filed for Chapter 7 or 13 bankruptcy, these remain on your credit file for 10 and seven years, respectively.
How to Choose the Right Credit Repair Company
Before you choose a credit repair company, there are some key factors you should consider to avoid scams.
1. Look out for false promises
First, keep an eye out for false promises, such as a guarantee that the company can remove any negative information from your report. As we’ve said above, the only information you can have removed from your report is incorrect or inaccurate information.
2. Check compliance with the Credit Repair Organizations Act (CROA)
Legitimate credit repair companies must comply with the Credit Repair Organizations Act (CROA). The CROA establishes clear guidelines for how credit repair can operate. One such guideline is that companies must provide a written contract that details their services, including costs, guarantees and an estimated timeline.
This law also requires companies to give you a copy of the “Consumer Credit File Rights Under State and Federal Law,” which details your right to access credit reports and dispute errors on your own, free of charge.
3. Read customer reviews
You should also look for the company on sites such as the Better Business Bureau (BBB), Google Reviews or Yelp to see how previous customers rated the company. For example, a clear red flag is when you see many reviews detailing similar issues. However, don’t base your decision solely on reviews.
4. Check regulatory agency databases
You should also check the complaint database of the Consumer Financial Protection Bureau (CFPB). This database will show if consumers have filed a complaint against the company for failure to comply with regulations or established laws.
5. Compare prices and fees
Once you’ve looked at several companies, compare prices, fees and services so you select the best service for your needs and your budget.
If none of the companies you evaluate offers the services or affordability you need, know you can fix your credit yourself for free.
How to Fix Your Credit for Free
While credit repair companies can help you navigate this process, here’s a guide on how you can fix your credit for free:
1. Review your credit reports
Go to AnnualCreditReport.com to request free copies of your credit report. You can request one free credit report per week from the three main credit bureaus (Equifax, Experian and TransUnion). Check your report to verify that all of your personal and financial information is correct.
2. Dispute inaccurate information
If your report contains any inaccurate or incorrect information, proceed to dispute these errors directly with the credit bureaus that reported the error. All three bureaus allow you to file disputes online, over the phone or by mail. Once you file your dispute, bureaus must investigate and respond within 30 days (in compliance with the FCRA).
3. Address legitimate negative items
To repair your credit when you have negative, yet accurate, information in your report, start by making consistent, on-time payments to reduce your balances. Focus on high-interest accounts like credit cards first. Next, turn to any debts in collections, if you have any. Contact the debt collection agency to negotiate a payment plan or a lump-sum payment. (Keep in mind that debt sent to collections will appear on your credit report for seven years, even if you pay the debt in full.)
4. Practice good credit habits
Practice good financial habits during the credit repair process and once your credit is in good standing. Examples of good habits are paying bills on time, paying your credit card balances in full every month (or keeping balances low) and not opening too many new credit or loan accounts at the same time.