About Credit Repair Companies

Credit repair companies claim that they can improve your credit rating score by deleting negative items, such as collection claims and bankruptcy judgments, from your credit report. Although legitimately removing inaccurate information from your credit report may improve your score, no quick solution exists for repairing damaged credit. A long-term credit repair plan involves paying your bills on time and managing your credit responsibly.

Function

Credit repair companies attempt to remove negative credit information from your report by disputing items through written request. In some cases, only one of the three credit reporting agencies may have a negative item on record. If a collection judgment was made in your favor, but never reported to a credit bureau, the item may still be shown on your report, and a credit repair agency will have it removed.

Contracts

The Credit Repair Organizations Act requires credit repair agencies to provide you with a copy of your federal and state consumer credit file rights. Your contract should include information like payment terms, service term length, service description and any written guarantees. Once you have signed the contract, the company can't start repairing your credit until at least three days have passed, which gives you time to cancel the contract without penalty.

Alternative Solution

You have the right to dispute any incorrect information on your credit report for free. If you choose to repair your credit on your own, you need to obtain copies of your credit report from TransUnion, Experian and Equifax. When submitting an appeal, you must provide documentation that shows why the information currently in your credit report is incorrect. The credit bureau then investigates the issue, and if it agrees with your appeal, it removes the negative information from your report.

Warning

You should not work with a credit repair company that asks that you pay a fee upfront, or guarantees that they can remove all negative information from your credit report, even if the negative information contains validity, according to the Federal Trade Commission. The FTC also recommends that you not work with a credit repair agency that discourages you from contacting a credit bureau directly.