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Does Credit Repair Work? What To Know Before You Sign Up

Credit repair can remove inaccuracies from credit reports. People with no credit, good credit, or deserved bad credit might have little use for it.

Credit repair can remove inaccuracies from credit reports. People with no credit, good credit, or deserved bad credit might have little use for it.

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      What Can Credit Repair Companies Do For You?

      Credit repair companies offer to improve your credit rating by disputing score-reducing errors in your credit file with credit reporting agencies on your behalf.

      As per a March 2023 report, more than 75% of the complaints fielded by the Consumer Financial Protection Bureau (CFPB) involved some form of credit reporting [*].

      While credit reporting mistakes happen, credit repair isn't recommended for everyone. The credit repair process can only remove inaccuracies from credit reports — meaning it can't take away accurate information or improve a correct credit score.

      Therefore, people with no credit, good credit, or deserved bad credit might have little use for credit repair.

      A credit repair company can:
      A credit repair company cannot:
      Help remove inaccurate information from your credit report.
      Permanently remove accurate items from your credit report.
      Dispute outdated information with creditors.
      Provide budgeting services or advice on personal finance.
      Check that lenders can verify all posted debts.
      Offer legal assistance or legal advice.
      Help you identify fraudulent items in your credit file.
      Guarantee removed items or a final credit score.
      Negotiate settlements with lenders on your behalf.
      Demand money upfront or operate without a minimum three-day cancellation policy [*].
      Offer credit monitoring services.
      Do anything with your credit report that you can't do yourself.


      What Credit-Risk Items Can Such Companies Offer To Fix?

      Most negative items stay on your credit report for seven years, except for Chapter 7 bankruptcies; these remain for 10 years [*]. So, credit repair companies comb through your credit history looking for expired or out-of-place derogatory marks.

      For example:

      • Late payments. Late payments only appear after a minimum of 30 days past due. Some creditors only report past due payments over 60 days. 
      • Charge-offs. A "charge-off" happens when a credit issuer writes off an unpaid debt as a loss. A "paid charge-off" occurs when a charge-off debt gets paid.  
      • Repossessions. Repossession indicates that a defaulted item was reclaimed by the lender or a debt collector. Repossessions may take place as quickly as 10 days past due.
      • Foreclosures. Foreclosure happens when a lender reclaims possession of a past due mortgaged property. The foreclosure process often begins when mortgages have been delinquent for four months.
      • Bankruptcies. After a bankruptcy, your credit file will state "discharged" or "included in bankruptcy" to indicate that there is no longer a debt balance.
      • Tax liens. Tax liens — legal claims against your assets for unpaid taxes — were removed from credit reports beginning in 2017 [*]. Since they're public records, however, tax liens can still affect your creditworthiness [*].
      • Civil judgments. Civil judgements — debts issued by the courts — stopped appearing on credit reports in 2017 [*]. As public records, these can still jostle your creditworthiness. 
      • Debt settlements. When you settle a debt with a debt collector, your credit report marks the account as "paid-settled" or "paid in full," depending on the terms. 
      • Student loan payment defaults. Federal student loans typically go into default when payments have been missed for at least 270 days [*].

      📚 Related: How Is Mortgage Fraud Detected? 20 Types of Fraud To Know

      What Influences Your Credit Score?

      Credit scores range from 300 (poor credit) to 850 (perfect credit). While a small percentage of people hit 850, the best credit scores typically come in above 750 or 800, depending on whether the FICO® or VantageScore® model is used.

      Your bill payment history greatly affects your rating, but several other factors go into your credit score.

      • Credit utilization ratio: The percentage of your available credit that you use. The lower the number, the better the score.
      • Age of credit accounts: Old credit accounts in good standing and newly opened accounts score well because they demonstrate good credit health.
      • Credit cards: Positive scores result from having multiple credit cards with high credit limits and low amounts of credit card debt.
      • Loan balances: Manageable balances on auto loans, mortgages, and personal loans showcase good credit habits.

      With so many factors influencing your credit score, it's crucial for you to dispute any errors that you find on your credit report. 

      This should be done carefully, however, as disputes themselves can indirectly affect your score. For example, disputes can lead to flagged accounts, late payments, and negative credit file updates.

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      Disputing Errors on Your Own

      Seven years is a long time for derogatory marks to hurt your credit rating. Thankfully, there are steps you can take to improve your credit report.

      When it comes to accurate negative items, you're at the mercy of the credit furnishers, but you might be able to make some improvements to your credit:

      • Collections or charge-off accounts. In some cases, debt collectors will remove a derogatory mark from your credit report if you settle the account. However, they are under no obligation to follow through, even if they oblige.
      • Late payments. Under special circumstances — such as a documented accident or illness — credit furnishers may recant previously reported late payments by using a "goodwill adjustment."
      • Bankruptcies. A bankruptcy only comes off your report in time; but you can reestablish your credit by taking on credit-building loans and credit cards, and paying them off regularly.

      When it comes to inaccurate negative items on your credit report, you can improve your credit score by disputing the mistakes. You can even save on any credit repair costs by disputing credit report errors yourself.

      Start by ordering and reviewing a free credit report from — and look for any of the following disputable errors [*]:

      • Inaccurate hard inquiries. Errant hard inquiries on your file might be the result of identity theft or a credit bureau mixing up accounts. If someone applied for credit in your name, it'll appear as a hard inquiry that warps your score.
      • Identity errors. While incorrect identity information — like your name or address — might not impact your credit score, you still want to address these errors as they could signal identity theft. If your file was mixed up, someone else's accounts could be hurting your own credit score. 
      • Incorrect account information. Account errors might include the wrong statuses, payment information, dates, and ownership. Whether they're the result of simple reporting oversights or identity theft, they need to be fixed.
      • Data management errors. Any data entry errors can and should be disputed, but pay special attention to incorrect account balances and credit limits; these can have significant effects on credit scores.

      How to file a credit dispute:

      If you identify an error on your credit report, you need to file a dispute by using the appropriate channels.

      • Gather documents proving the error. Collect any documents that show conflicting information — such as the correct account numbers or statuses, or an active identity theft claim.
      • Contact the credit reporting company. File a dispute with every major credit bureau reporting the error. You can file disputes online with Experian, Equifax, and TransUnion.
      • File a dispute with the information furnisher. You can also dispute errors with the information furnisher who reported it to the credit bureau [*].
      • Wait for a response. Credit bureaus and information furnishers have 30–45 days to investigate and respond to eligible disputes [*]. They may accept your dispute and make the required changes, or send the dispute out for further investigation. If they deem the dispute frivolous, investigators must inform you within five days of their decision.
      • Follow up if you disagree with the results of the dispute. If no response arrives or the results don't satisfy you, you can add a statement to your credit file detailing your dispute. You can also file a lawsuit against the offending companies [*]

      Avoiding Sham Credit Repair Companies

      While even legitimate credit repair companies charge high prices for services that you can perform yourself, credit repair scams may cost you more.

      These scammers use deception and false promises to dupe victims into paying upfront or monthly fees, or giving up personal information. In 2022 alone, the CFPB fielded over 2,600 consumer complaints about credit repair companies [*].

      Last year, the CFPB revealed a $2.7 billion judgment against some of the largest credit repair companies in the industry, including Lexington Law.

      The lawsuit reported that a large group of these companies illegally charged upfront fees for incomplete services — a violation of the Telemarketing Sales Rule (TSR) [*].

      If you are in dire need of credit repair services, you can avoid scams by looking out for these red flags:

      1. Insisting on payment before results. Federal laws, such as the Credit Repair Organizations Act (CROA) and TSR, prohibit credit repair companies from accepting payment until after they perform their services.
      2. Offering blind promises. There's no guarantee that credit files and scores can be amended; any promises made (especially without seeing your file first) should be considered suspicious.
      3. Promising to remove accurate, negative information. Credit bureaus and information furnishers have no obligation to remove accurate information. In fact, many companies refuse to remove accurate information under any circumstances — citing the Fair Credit Reporting Act (FCRA) [*].
      4. Omitting information regarding legal rights. Credit repair companies should be forthcoming about your legal rights. Avoid companies that don't have written contracts, clearly defined cancellation policies, or detailed information about the dispute process.
      5. Evading questions about specific services or costs. Only engage with companies that provide clear service and fee descriptions. They should also be honest about the fact that anything they can legally do for you, you can do yourself.
      6. Telling you not to contact any credit bureaus directly. No company can try to limit your access to information or your ability to represent yourself.
      7. Advising you to misrepresent information. Some scammers suggest that you lie in your disputes, file a false identity theft report, or contrive a new identity and credit file by using your Employee Identification Number (EIN) instead of your Social Security number (SSN). All of these suggestions are unethical and may carry serious legal ramifications.

      📚 Related: Is Debt Relief Real? Or Is It a Scam?

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      How To Report Credit Repair Scams and Rebuild Your Credit

      It's your free and legal right under the FCRA to review your credit reports and dispute errors [*], but not everyone can or wants to do this on their own.

      If you need help, consider a credit counselor from a non-profit organization like the National Federation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).

      If you think you've been victimized by a credit repair scam, act quickly to limit the damage:

      • File a complaint with the Federal Trade Commission (FTC) by visiting
      • File a complaint with the CFPB by visiting or calling 1-855-411-CFPB (1-855-411-2372).
      • File a complaint with the Better Business Bureau (BBB) by visiting
      • File a complaint with your attorney general by visiting

      Unfortunately, even if you know the warning signs and how to respond to scams, there's no way to completely prevent fraud and identity theft.

      With the industry's fastest alerts, Aura informs you the minute it detects suspicious activity in your financial accounts or credit file. 

      A single-click credit lock feature lets you lock down your credit file, while Aura’s always-on fraud specialists are available 24/7 to walk you through the identity restoration process.

      Keep your credit score strong (and safe). Try Aura free for 14 days.
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