Credit repair is the process of raising your credit score by finding mistakes and fixing them, working out a better deal with creditors, and building a better credit history. “Think of it like housekeeping, but for your financial history,” says Mark Stewart, Certified Public Accountant for Step By Step Business. “Youre getting rid of the cobwebs and making the place shine. “.
You can fix your credit on your own, but a lot of people find it too hard to do on their own and want to hire a credit repair company to help them. Understanding how the process works can help you get the most bang for your buck.
Having a good credit score is essential for getting approved for loans and credit cards with favorable terms However, mistakes and errors on your credit report can drag down your score. That’s where credit repair specialists come in – they work on your behalf to identify and dispute inaccurate information on your reports. But how much do their services cost?
The Cost of DIY Credit Repair
You don’t have to pay anyone to dispute mistakes on your credit report. Experian, Equifax, and TransUnion are the three main credit bureaus. The Fair Credit Reporting Act says they have to give you a free copy of your report once a year. You can request them online at AnnualCreditReport. com.
Once you have your reports, you can go through them carefully to find any mistakes, such as accounts that don’t belong to you, late payments that were actually on time, and so on. There are two ways to dispute something with the credit bureaus: by mail or online. They are obligated to investigate within 30 days.
The downside of DIY credit repair is that it can be time-consuming. You’ll need to regularly check all three of your credit reports, identify disputes, create dispute letters, and follow up to ensure errors get corrected. For people with already busy schedules, hiring a service may be worth it.
How Credit Repair Companies Charge
If you hire a credit repair company, you’ll pay an ongoing monthly fee, often between $60 to $120. There may also be an initial setup or first work fee of around $100 to $200.
The monthly fee covers services like:
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Obtaining and reviewing your credit reports to identify potential errors.
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Creating customized dispute letters to send to the credit bureaus.
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Following up on disputes to make sure mistakes get removed.
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Providing updates on progress and any changes to your credit reports or scores.
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Offering guidance on steps to take to further improve your credit.
Many companies also offer different package levels, with higher-priced ones including things like cease and desist letters to creditors, goodwill intervention letters, and education materials.
So for their monthly fees, credit repair services save you the time and hassle of managing the credit repair process on your own. However, it’s important to note that there are no guarantees – credit bureaus will only remove information that is found to be inaccurate or unverifiable. No company can legally remove accurate, negative information from your reports.
Factors That Impact Cost
Most credit repair companies charge around $60 to $120 a month, but prices can be much higher or lower depending on things like
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Where you live—Each state has its own credit repair laws, and some of them limit how much companies can charge. In Georgia, Maryland, Vermont, and some other states, for instance, businesses can’t get paid until the job is done.
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Your credit report status – Those with more negative items or issues like bankruptcy on their reports may pay higher fees. More complex cases take more work.
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Add-on services – As mentioned previously, companies offer varying packages with more services for higher monthly fees. But even basic packages usually include credit report reviews, dispute letters, score tracking and counseling.
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Payment structure – Some companies charge monthly only after disputes result in deletion of negative items. Others offer flat monthly rates regardless of results.
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Reputation and experience – More reputable companies with longer track records and better BBB ratings can demand higher prices. Newer or fly-by-night operators typically undercut standard pricing.
No matter what you pay, read contracts carefully so you understand exactly what you’re getting. Research companies thoroughly and check reviews. While credit repair services can yield positive results, they require trust – you’re handing over sensitive financial information.
Is the Cost of Credit Repair Worth It?
The cost of credit repair services can seem high when you look only at the monthly fees. But for many people, the value comes from the time and stress it saves.
Disputing errors and navigating communications with bureaus can be complex and frustrating. Having experts handle the legwork allows you to focus on other financial priorities. And in the long run, correcting credit report mistakes can save you thousands on interest for big purchases like homes and cars.
Paying ongoing fees does mean credit repair requires a financial commitment. Like any service, you have to weigh the costs against the potential benefits for your situation. But for those with limited time and multiple inaccuracies dragging down their scores, professional credit repair services often prove well worth the cost.
How long does credit repair take?
Addressing simple issues, such as fixing a clear error on a credit report, usually takes a few months, according to Stewart. He explains that most people who use credit repair services dont have complex cases and that “four months is the average length of time most people pay for.” However, Stewart says that “some issues, such as a mix of errors and late payments, take about six to 12 months to resolve, while significant debt and a history of financial issues take over a year to resolve,” he says.
Although this may seem like a long time, Camberato explains that “credit repair is a process involving a series of letters sent to address each negative item on your report. These exchanges can take up to 30 days each, so things dont move at lightning speed.”
Alternatives to credit repair
There are alternatives to credit repair. You may have high credit utilization, which could be lowering your score. If that is the case, then you might want to consider debt consolidation.
Debt consolidation combines multiple accounts into a single monthly payment. Use this method to consolidate revolving debt, such as credit cards, which could lower your credit utilization ratio. Your credit utilization accounts for 30% of your FICO score.
Credit counseling can also be an alternative. You will work with a trained credit counseling professional who will take a look at your current spending habits, debt load, and credit reports. Based on that review of your financial standing, you will receive steps to address your financial and credit issues.
Credit Repair Pricing Monthly Fees vs. One-Time Charges – What’s Best for You? Right Way vs. Wrong
FAQ
How much do credit repair specialists charge?
Credit repair specialists typically charge a monthly subscription fee ranging from $50 to $150. Some also charge a setup fee, which can be anywhere from $19 to $200.
How much does a credit repair plan cost?
Credit repair companies can cost between $15 to $150 monthly in addition to a setup fee. Credit repair companies cannot charge for services before they have been completed.
Is it worth paying someone to fix credit?
If you have a history of debt problems or find mistakes on your credit report, you might want to use a repair service to “clean it up.” ” Before you pay, however, know the way these businesses operate. In the vast majority of cases, hiring an outside company will do no more than waste your money.
How much does a credit repair lawyer cost?
Credit Repair Negotiation Lawyer Fee Structures: The fee amount will depend on the type of case you have and how many creditors you owe money to. In most situations, the average fee can vary from $500 to $5000, depending on the complexity of the negotiations.