Credit Repair Services: Best Providers and Scams to Watch out For

Priyanka Prakash, JD

Senior Staff Writer at Fundera
Priyanka Prakash is a senior staff writer at Fundera, specializing in small business finance, credit, law, and insurance. She has a law degree from the University of Washington and a bachelor's degree from U.C. Berkeley in communications and political science. Priyanka's work has been featured in Inc., Fast Company, CNBC, and other top publications. Prior to joining Fundera, Priyanka was managing editor at a small business resource site and in-house counsel at a Y Combinator tech startup.
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One of the most important factors in a business loan application is your credit score. And of course, credit is equally important for personal milestones, such as buying a home or car. There is a lot of information about your financial history tied up in your three-digit credit score.

People with low credit scores might wonder about the ability of credit repair services to boost their credit standing. Credit repair agencies widely advertise their ability to quickly improve credit and help customers reach their financial goals. There are several legitimate companies in the credit repair industry, but there are also a lot of scammers. If you fall victim to a scam, you could pay unnecessary fees and wind up with more debt and lower credit than you started out with.

To help, we’ll go over how credit repair services can help, identify scams to watch out for, and review the best credit repair services. Armed with this information, you’ll be able to take smart steps to improve your credit and keep it as high as possible.

What Are Credit Repair Services?

Credit repair services, in exchange for a fee, will review your credit report for errors and contact creditors, debt collectors, and credit bureaus to have the errors removed from your report. Some credit repair services will also negotiate with creditors to settle or remove delinquent accounts and recommend credit management tips.

Most credit repair companies follow these steps to improve your credit score:

  1. Review your credit report for errors and negative items.
  2. Gather documentation from you showing proof of any errors.
  3. Dispute errors with bureaus, creditors, and debt collectors.
  4. Negotiate with creditors and debt collectors.

Most credit repair services will start by obtaining a copy of your credit report from each of the three main credit bureaus—TransUnion, Equifax, and Experian. Then, they will carefully review the report for negative items, such as delinquent accounts, charge-offs, collections, and bankruptcies.

There might be errors in your credit report. For example, an account might show as late even though you paid on time, or it might show the wrong overdue balance. If you’re a victim of identity theft, accounts might show up on your report that you never opened.

If there are any errors, the credit repair service will request written proof of the error from you, such as bank statements or correspondence with the creditor. Then, they will dispute the error on your behalf with the credit bureau. Alternatively, the credit repair company might send dispute letters directly to the creditor or to a collection agency that is working for the creditor.

Even when all the information on your credit report is accurate, credit repair services can help you negotiate with creditors. For example, a creditor might agree to let you settle a $5,000 outstanding bill for $3,000. To secure such settlements, credit repair companies might send goodwill letters on your behalf.

Credit Repair Services vs. Do-It-Yourself Credit Repair

Short of using a credit repair service, there are several steps you can take on your own to improve your credit. Any credit repair company that tells you that you cannot improve your credit on your own isn’t telling the truth and should send up red flags.

You’re legally entitled to one copy of your credit report every year from each of the three main credit bureaus—free of charge. Once you obtain your credit report, you can review it yourself for errors. If you find errors, there’s a clearly delineated credit report dispute process that doesn’t cost any money. You contact the credit bureau and the creditor to inform them that you’re filing a dispute. These parties generally have 30 days to investigate the dispute and remove any inaccurate information.

Since you can dispute errors on your own, what’s the point of using a credit repair service? Anything that a credit repair service can do for you, you can do yourself for free. But credit repair services will take the work off your hands and advocate for you in your journey to better credit.

Logan Allec, a CPA and owner of Money Done Right, equates credit repair services to tax preparation services:

“As a CPA, sometimes potential clients ask me, ‘Well, couldn’t I prepare my tax return myself? Why should I pay you to do it?’ And I always answer, ‘Yes, of course you can prepare your tax return yourself’… But as with many services, it really comes down to expertise and time.

If you are willing to do the research, carefully review each item on your credit report, and take the time to craft your dispute letters, maybe doing it yourself is the way to go. However, legitimate credit repair companies typically have highly trained staff… and these individuals will likely be able to better navigate the waters of credit repair than you could on your own. You will save yourself time by paying a credit repair company to do the work for you.”

If you’re not in the habit of regularly checking your credit report or if your credit report contains several errors, disputing each item on your own can take many hours of work. You also might not be comfortable negotiating with creditors on your own. In that case, a credit repair service can be very valuable.

Credit Repair Services vs. Credit Counseling

For some people, credit counseling is a good alternative to credit repair services. Like credit repair services, credit counselors will review your credit report, flag errors, and recommend credit boosting strategies. However, credit counselors will not dispute errors or negotiate with creditors on your behalf.

Most credit counseling agencies are nonprofits and provide credit education online, over the phone, and in person. Often times, they are free, but not always. For individuals who are deep in debt, creditor counselors can help arrange a debt management plan. In a debt management plan, you deposit a certain amount of money with the credit counselor. The counselor then distributes that money to your different creditors.

If you decide to opt for credit counseling, then it’s best to find a counselor who is certified by an outside organization, such as the National Foundation for Credit Counseling (NACC). The U.S. Department of Justice also maintains a list of credit counselors who are approved to provide pre-bankruptcy advice.

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How Much Do Credit Repair Companies Charge?

Credit repair services usually charge a one-time “first work fee,” plus an ongoing monthly fee. The first work fee, which averages around $80 to $100, is typically charged five or six days after a customer signs a credit repair contract. It covers initial work, such as reviewing your credit reports and recommending a plan for improving your credit score.

The ongoing fee is usually around the same amount as the first work fee, charged monthly. It covers the disputes and removal of negative items from your credit report. Some companies include unlimited disputes in the monthly fee. Others limit you to a certain number of disputes each credit cycle (around 30 to 45 days). For example, if a credit repair service says they will dispute six items per cycle, that could break down to something like this: disputing one late payment error and one charge-off error at each of the three credit bureaus. Since each error usually has to be disputed at each bureau (if it shows up on all major credit reports), each error usually accounts for three items.

Small business owners should be wary of “pay per delete” fee structures. In such cases, the credit repair company charges a fee each time they get an item removed from one credit report. Let’s say a credit repair charges $50 per deletion. In the example above, the total would come to $50 for each of the six removals—$300 in total. These fees can quickly add up to become very expensive.

Some credit repair services charge extra for obtaining your credit report and for sending goodwill letters, cease and desist letters, or debt validation letters. Make sure you understand exactly what you will be charged by reviewing your credit repair contract prior to signing.

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Are They Legit? Credit Repair Scams to Watch out For

Scams are common in the credit repair industry, so Congress passed the Credit Repair Organizations Act (CROA) in 1996. This law is designed to protect consumers from unfair and deceptive practices. Among other requirements, CROA prohibits credit repair companies from charging advance fees, requires a written contract, and gives customers a grace period to cancel.

Along with CROA, enforcement by the Federal Trade Commission (FTC) has cleaned up the credit repair industry. There are now several legitimate companies in this space. But if a service seems too good to be true, it probably is.

These are some credit repair scams to watch out for, so you don’t become a victim:

  • Requiring an upfront fee: By law, a credit repair service can’t charge you until they’ve actually performed the services they said they would. The first service is usually reviewing your credit report and recommending a plan of action.
  • Guaranteeing results: You might see ads promising “higher credit score—guaranteed” or “guaranteed results in 30 days.” However, no credit repair company can guarantee that your credit score will increase until negative information is actually deleted from your credit report.
  • Claiming that you can’t improve credit on your own: Steer clear of credit repair companies that claim to have some insider credit-boosting strategy. Their main value-add is the ability to dispute items more efficiently and quickly.
  • Suggesting illegal or unethical practices: Creating a new credit profile to hide an existing credit history is illegal, and so is attempting to remove negative but accurate credit information. If the credit repair company suggests anything along these lines, it’s best to avoid them.
  • Not providing a written contract: Under CROA, credit repair services must be specified in a written contract.
  • Not allowing you to cancel: Under CROA, customers have three business days to cancel a credit repair contract without penalty. This right must be clearly specified in the contract.

The best way to avoid scams is to vet a credit repair service, just as you would any other small business service provider. The Better Business Bureau (BBB), FTC, and state consumer protection agencies keep records of complaints against credit repair companies. Steven J.J. Weisman, Esq., an attorney and leading credit expert and author, advises, “If you are considering using a credit repair company, you should check with your state’s attorney general and your state’s consumer protection agency to see if there are any consumer complaints against them.”

If you think you have been a victim of fraud by a credit repair service, you should report it to the BBB, FTC, and any relevant state agencies.

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Best Credit Repair Services

The general pointers outlined above should help you avoid credit repair scams. However, for more detailed guidance, we also researched credit repair services to compare pricing and services. These are some companies that can legitimately help you improve your credit score.

These are some of the best credit repair services to try:

Best Overall: Key Credit Repair

For a flat monthly fee, Key Credit Repair will remove an unlimited number of negative items from your credit report with each of the three credit bureaus. They offer a free initial consultation, where they’ll review your credit report to see if you’re a good candidate.

If you sign up for the service, they will recommend a specific credit building plan and get to work on removing errors from your report. Key Credit Repair will also negotiate with creditors on your behalf. They’ll even suggest positive credit building strategies that you can do on your own over the long-term to keep your credit in good shape.

Although Key Credit Repair doesn’t publish pricing information online (their primary drawback), other sites indicate that their first work fee is $99.95, and the same after that on a monthly basis until you decide to cancel. For added peace of mind, Key Credit Repair is fully insured and bonded, and certified by the National Association of Credit Services Organizations. Key Credit Repair is a BBB-accredited, A rated company with 4.5/5 stars from customers.

Best Value: Sky Blue Credit

Established in 1989, Sky Blue Credit has a long record of helping people repair their credit scores. We like Sky Blue most for the value they provide.

Sky Blue charges a $79 first work fee, assessed six days after signup. After that, there’s a monthly fee of $79. There are no additional charges to obtain your credit reports, and no confusing, multiple pricing levels like many other credit repair companies have.

Every 35 days, Sky Blue will dispute 15 negative items (five items per bureau) on your credit report. They’ll also analyze your credit report. Most credit repair companies treat all negative items in the same way, but Sky Blue will help you determine which disputes will have the biggest impact on your score. They’ll also take care of debt validation, goodwill letters, and cease-and-desist letters at no additional cost. On top of everything, Sky Blue offers an unconditional 90-day money back guarantee. The company has a C rating on the BBB and isn’t BBB-accredited, but they get five stars from customers.

Best Expertise: Lexington Law

If you’re looking for a company that’s experienced with pretty much any facet of credit repair, you might want to try Lexington Law. This company started in 1991, and has about 500,000 active clients. They collectively removed 10 million negative items from credit reports in 2017. Each Lexington Law office is owned and operated by a consumer advocacy attorney who understands the details of credit reporting laws.

Similar to Key Credit Repair, Lexington Law offers a free consultation. There’s a one-time “first work” fee of $89.95 to $129.95 depending on which monthly plan you choose. After that, the monthly fee varies based on which plan you select. Disputes and credit negotiations are included with the entry level $89.95 per month plan. However, you need to purchase the mid-tier plan (priced at $109.95 per month) for credit score alerts and monitoring. Cease-and-desist letters to collectors are only available in the costliest $129.95 per month plan.

Lexington Law gets mixed online reviews. They are not BBB-accredited and have a C rating on the BBB website. Many clients claimed to have seen no improvement in their credit score and difficulty getting clear answers from representatives on the phone, while others claimed that the process worked quickly and successfully. There’s no minimum contract length, so you can always sign up and cancel later if the program doesn’t have results for you.

Best Customer Service: Credit Saint Credit Restoration

When it comes to customer service and transparency, Credit Saint Credit Restoration earns our top pick. Each Credit Saint customer is assigned a team of credit specialists to supervise their case. One of your credit specialists will call you periodically to update you on progress. And if you call their phone number to discuss your account, you will talk to the same people every time. If you prefer an online experience, you can track progress on your online account and see the status of different negative items in real time.

There are three pricing levels with Credit Saint: Credit Polish, Credit Remodel, and Clean Slate. Depending on the plan level, there’s either a $99 or $195 first work fee. After that, the monthly fee is $59.99, $79.99, or $99.99 for the Polish, Remodel, and Clean Slate plans respectively. The plans differ primarily in terms of which negative items the company will pursue on your behalf. For instance, the least expensive plan doesn’t cover bankruptcies. In addition, the team will be more aggressive in quickly cleaning up disputes if you’re on one of the higher level plans.

If you’re not happy with the results, Credit Saint offers a 90-day money back guarantee. Plus, Credit Saint is BBB-accredited and has an A+ rating, the highest among all of the credit repair services we reviewed.

Best for Long-Term Use: The Credit People

The Credit People is a strong contender for individuals who need a long-term credit building partner. The company will work to remove all types of negative items from your credit report, from late payments to charge-offs to bankruptcies. In addition to disputing any errors on your report, The Credit People will also suggest positive credit building strategies.

There are two pricing options. First is a monthly membership with a $19 first work fee, plus $79 per month after that (cancel anytime). If your credit reports need a lot of work, then you can opt for the six-month plan for a flat $419 (no first work fee). That flat fee works out to be less expensive than all the other companies on our list. The average credit repair plan takes three to six months to succeed, and long-term users can get great value with The Credit People.

Unlimited disputes are covered in each plan, plus The Credit People don’t charge separately to pull your credit reports. That is included in the fee. They have 24-hour online account access and a satisfaction guarantee.

The Credit People didn’t earn our best overall rating because they only have a C rating on the BBB website and aren’t BBB-accredited.

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Credit Repair Services: Accelerate Your Credit Score

Credit repair services can’t guarantee an increase to your credit score. But these companies might be able to help some small business owners fix errors in their credit report and see a score increase.

Ultimately, you can think of credit repair services as you would any other outsourced business function, such as accounting or taxes. You can do these things on your own, but hiring a professional often gets the job done more quickly and more accurately.

Whether you choose a credit repair service, credit counselor, or a DIY approach, the result—better credit—will help you reach your business goals.

Editorial Note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone. They haven’t been reviewed, approved, or otherwise endorsed by any of the companies mentioned above. Learn more about our editorial process and how we make money here.

Priyanka Prakash, JD

Senior Staff Writer at Fundera
Priyanka Prakash is a senior staff writer at Fundera, specializing in small business finance, credit, law, and insurance. She has a law degree from the University of Washington and a bachelor's degree from U.C. Berkeley in communications and political science. Priyanka's work has been featured in Inc., Fast Company, CNBC, and other top publications. Prior to joining Fundera, Priyanka was managing editor at a small business resource site and in-house counsel at a Y Combinator tech startup.

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