Credit repair online is the process of disputing inaccurate information that appears on your credit report. These errors can include missed payments, debts that were paid or settled, and re-aging (when creditors or debt collectors change the “purge-from” date of an account, which keeps it on your report longer than it should). Credit repair agencies dispute these items in order to improve your credit report, which will then help you qualify for loans and credit cards at lower interest rates. Credit repair is a legal process protected by the Fair Credit Reporting Act.
Inaccurate negative data can reduce your credit scores by dozens or even hundreds of points, making it difficult to get approved for low-cost loans and credit. That’s why many consumers turn to credit repair services — which help remove the inaccurate data that’s harming their reports and scores.
But it’s important to know how to recognize scams when shopping for a service provider. Here are a few things to watch out for when choosing a credit repair agency:
First, make sure the company is licensed to make credit disputes in your state. Check your state’s licensing department, which should have a list of accredited firms. A reputable firm should also have attorneys who specialize in credit repair and can handle complicated issues such as wrongful reporting.
Another sign of a legitimate credit repair company is that it offers a money-back guarantee. Look for a company that states this clearly on its website or in its promotional materials. A reputable credit repair company will also provide you with a free copy of your report after completing its work, and it should update you about any progress made.
You should also consider seeking free or low-cost credit counseling from a nonprofit organization to review your financial situation and develop a plan to address your challenges. While these services can be expensive, they are often more effective than working with a credit repair agency.
It’s important to note that repairing your credit will take time, no matter who you work with. It can take several months for your score to rebound after maxing out a credit card or declaring bankruptcy. And it can take years to recover from other negative events, such as identity theft or repossession.
If you choose to work with a credit repair company, it’s best to find one that charges an upfront fee that’s not too high. This may be called a setup or initial fee, or a “first work” fee. This will cover the cost of pulling your credit reports, reviewing them for errors and gathering any documentation needed to support your disputes. Then, most credit repair companies will charge a monthly fee for ongoing maintenance of your report. Some may also offer a low-cost pause option that allows you to skip monthly payments while your account remains active. This is a great way to save on startup fees.