Credit repair services will help fix mistakes on your credit report in exchange for a fee, but it's easier than you'd think to do it yourself

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• Credit repair agencies can help you remove incorrect information from your credit reports, in exchange for a fee. But you can also file a credit report dispute on your own, for free.
• These companies generally give you access to your credit report for an an additional fee, but you can get your credit report for free each week through April 2021.
• Remember that credit repair services aren't miracle workers; they can't make late payments disappear from your report if you indeed paid your bills late.
• Consider the alternatives to credit repair, such as fixing your credit on your own, working with a credit counseling agency, or using a debt consolidation loan to get your finances back on the right track.

If your finances aren't where you'd like them to be, it's easy to let your credit score spiral out of control. After all, your payment history is the most important factor that makes up your FICO score, meaning just a few late payments can cause your score to plummet. Accounts in default and collections can hurt your score further, along with the total amount you owe in relation to your credit limits. And when you hurt your credit score, you're damaging your chances of getting approved for new lines of credit, or for getting a favorable interest rate when you apply for a loan.

If you find yourself in a position where it seems like nothing is going right with your credit, you may be wondering if you need third-party help. Credit repair companies promise to help rectify any mistakes on your credit report, but before you sign up, it's important to know what they can and cannot do.

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What is a credit repair company?

According to the Federal Trade Commission (FTC), consumers hire credit repair companies to help them figure out what went wrong with their credit, and to investigate any mistakes that may be on their credit reports. However, these companies cannot remove negative information on your credit report if it's accurate. All they can do is figure out what the mistakes are, then help you take the steps required to get any mistakes corrected so they can stop damaging your credit score.

Lexington Law, a credit repair company that also offers legal counsel, says that the expertise of credit repair companies is what makes the process easier for consumers. Credit repair companies "know what to look for, understand the process needed to fix inaccuracies, and are informed on what clients are legally entitled to request from both credit bureaus and creditors."

While consumers can look for credit report mistakes on their own, having professional help could make the process easier and less stressful. After all, not all consumers are educated on credit, and having a helping hand throughout the process may even be required to keep some consumers on track.

Credit repair versus credit counseling

Lexington Law also says that you shouldn't confuse credit repair with credit counseling. Credit repair companies tend to be for-profit agencies that will help you repair your credit for a fee, whereas credit counseling agencies tend to be not-for-profit companies that help consumers create a plan to get out of debt and get their finances back on track.

Still, the FTC notes that you should know that not-for-profit status doesn't mean that services are free, and that some credit counseling agencies charge high fees or ask their customers to make voluntary payments. With that in mind, you should make sure you know about all upfront fees involved in any service you seek out while you work to repair your credit score.

What to consider before using a credit repair company

The most important thing you should consider when it comes to credit repair is the fact that, no matter what anyone says, credit repair companies cannot do anything for you that you cannot do yourself.

The FTC points out that "only time and a personal debt repayment plan" can really improve your credit. Credit repair agencies can help you get incorrect information removed from your reports, but this is also something you can do yourself.

If you do decide to work with a credit repair company, you should know these details ahead of time:

• The FTC notes that it's illegal for credit repair companies to lie about what they can do for you.
• It's illegal for credit repair companies to charge you before they provide any help.
• You have the legal right to a written agreement in writing before they perform any services.
• You also have the right to know the exact costs you'll pay, how long it will take to get results and any guarantees.
• You have three days to cancel the agreement without any charge.

If a credit repair company doesn't perform the services it promises, you have the right to sue them for your losses and to seek punitive damages. You also have the right to join a class action lawsuit against any credit repair company you work with.

How much does credit repair cost?

You may want to work with someone who can help you repair your credit, but you should know that you could pay significant sums of money over time. Not only can you expect to pay a monthly fee while you receive credit help, but other upfront fees can also be charged to access your credit reports or get the work started.

While the charges from credit repair companies can vary, here are some of the most popular companies you can work with, and how much you can expect to pay:

	Monthly fee	Other fees
CreditRepair.com	$99.95	$14.99 credit report fee
Lexington Law	$89.95 to $129.95	N/A
Oak Credit Repair	$85	N/A
Apex Credit Fix	$99	$1 credit report fee
CreditUS	$99	$99 first work fee; $48 for credit reports

Should you use a credit repair company?

Only you can decide if working with a credit repair company is worth it. However, it may be smarter to take the steps to get negative information removed from your credit reports on your own. After all, credit repair costs vary, but this assistance is never free.

Most companies charge a monthly fee as well as an upfront cost to obtain your credit reports, and the monthly fee can be up to $100 with most popular agencies. You also have the right to get all three of your credit reports for free every week from AnnualCreditReport.com through April of 2021, so there's no need to pay for this service.

While it's possible to get negative information removed from your credit reports if it's incorrect, you likely won't be able to get negative information removed from your reports if the data is correct. For example, you cannot make a late payment go away if you truly paid a bill late and that information was reported to the credit bureaus. Only time can make true negative reporting go away, notes the FTC.

In fact, most negative reporting stays on your credit reports for seven years, but bankruptcy will stay on your report for 10 years. "Unpaid judgments against you will stay on your report for seven years or until the statute of limitations runs out, whichever is longer," reports the FTC.

How to dispute a mistake on your credit report

If you do get a copy of your credit reports and you find negative information that's incorrect, you can dispute it on your own. To dispute incorrect information on your credit reports, you should take the following steps:

• Contact the creditor (such as your bank) that reported the negative mark on your report to try to resolve the issue
• If you can't resolve the issue with your creditor, contact the credit-reporting company that issued the report with the inaccurate negative mark
• You'll want to send the credit-reporting agency a letter using this format provided by the FTC

The FTC says that credit reporting agencies are required to investigate the items you dispute within 30 days unless they determine that your dispute is frivolous or unwarranted.

Consider alternatives to credit repair

You should also consider some other options for repairing your credit if you have room to improve. This can include the do-it-yourself method, which involves creating a plan to stay on top of your bills and pay down debt over time.

To help repair your credit yourself, you should make sure all of your bills are paid early or on time, work to pay off any debts in default or in collections, and pay down debt in order to lower your credit utilization. You should also refrain from opening or closing too many accounts while you try to improve your credit score.

Read more: How to keep your credit score up when the economy feels uncertain

Also consider debt consolidation, which involves getting a debt consolidation loan or a 0% APR credit card that lets you pay off your debts at a lower rate, at least at first. Finally, consider reaching out to a credit counseling agency that can help you design a plan to pay down debt and change your lifestyle so you can avoid racking up more debt in the future.

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