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What Are Credit Repair Services, and Are They Worth the Money?

You don't have to pay a company to dispute errors on your credit report. You can repair your credit on your own, for free.

tolgart / Getty Images

The concept of credit repair is often linked with credit repair companies. But contrary to some misinformation, credit repair companies don’t have a monopoly on credit restoration. 

At its core, credit repair can be carried out by anyone, for free.

Credit repair might help you if you’re among the growing number of Americans who struggle with debt repayment. Data from Experian’s latest survey shows that the average credit card balance is $5,589, which has become even more expensive to manage as credit card interest rates rise.

Credit repair companies often find ways to target individuals who are struggling with debt, offering promises of easy financial freedom. But the services offered by these companies come at a significant cost that can send those with existing financial problems even further into debt.

If you find yourself targeted by an ad for a credit repair company, use caution in taking their promises at face value. While credit repair companies offer a paid service, anything these companies do on your behalf can be done on your own, for free.

Here’s what to know about credit repair companies, how to decide if you need one and how to spot a predatory credit repair scam.

What is a credit repair company?

A credit repair company charges you a fee in exchange for reviewing your credit report and disputing negative items on your behalf. 

Many consumers have errors on their credit report that could lead to higher-than-necessary payments on loans or insurance policies, according to the Federal Trade Commission. But these errors can be identified and addressed through an established credit repair process. The Fair Credit Reporting Act gives you the right to dispute inaccurate information and get any wrong information removed or corrected. Credit bureaus have 30 days to respond to disputes with a completed investigation, according to the law.

Did you notice that the intervention of a credit repair company isn’t mentioned? This can all be done on your own.

Note: Some people occasionally confuse credit repair companies with credit counseling agencies. The two are very different. For one, credit repair companies are for profit, while credit counseling agencies are typically nonprofit organizations. While the former offers a limited paid service, the latter takes a big-picture approach to your overall financial health. Credit counselors will usually perform a free audit of your finances and help guide you toward the best strategy from a list of options. This education-based approach tends to be more successful at getting people out of debt and helping them stay there.

How do credit repair companies work?

Credit repair companies dispute errors on your credit report by filing formal complaints on your behalf. The goal is to have incorrect or outdated information removed.

But a credit repair company cannot remove negative information from your credit report, if it’s accurate. If a company claims it can remove a series of negative credit marks from your credit profile, that’s a good indication that the company may not be reputable and could possibly be a scam.

Once you select a company, it will conduct an in-depth review of your credit report to identify any items negatively affecting your score. It will then contact the three major credit bureaus, Equifax, Experian and TransUnion, to resolve what items it can. The disputes can include areas like bankruptcies, tax liens and charge-offs, which all may be disputed or negotiated for removal through letters to the credit bureaus, letters to your creditors or even a simple verification.

Again, all of this work can be done on your own, it just takes some time and effort.

How much do credit repair companies cost?

Working with a credit repair company can be costly, unlike partnering with a credit counseling agency, which typically offers free or low-cost services, and places a greater emphasis on education.

“Credit repair services cost money,” says Brian DeChesare, founder of Mergers & Inquisitions, a blog devoted to banking and finance. “This can be challenging for people who are already deep in debt.”

The actual costs vary from a one-time fee to a per-item fee for every negative mark the company removes from your credit report. Some credit repair companies provide monthly pricing as well, which can include an average setup fee of $100 and can cost hundreds per month. Ultimately, the cost of credit restoration will depend on several factors like where you live, what services you need and the severity of your case.

Red flags to watch out for

If you do decide to reach out to a credit repair company, watch out for some of the common warning signs of credit repair scams. The Consumer Financial Protection Bureau lists several red flags, such as companies asking for payment up front, making promises that sound too good to be true and not providing complete or accurate information to all your questions.

You can also check if the company has complaints against it through the Better Business Bureau. If you’re in doubt about the legitimacy of a particular company, it’s best to play things on the safe side and look elsewhere for help.

“It’s important to watch out for credit repair companies that guarantee score increases, demand payment upfront, advise you not to contact the credit bureaus directly and request that you misrepresent information by creating a new ‘credit identity,’ which is entirely illegal,” says Matt Woodley, founder of Credit Informative.

The Credit Repair Organizations Act also entitles you to certain legal rights when dealing with credit repair companies. Companies are prohibited from demanding upfront payment before services are rendered and must let consumers cancel for any reason within the first three business days. Terms of service must be outlined in a written contract, which has to include payment structures, an estimated time frame to complete the credit repair services, and any performance guarantees. The Credit Repair Organizations Act also forbids credit repair companies from using deceptive advertising practices, such as making false promises. 

Ways to improve your credit on your own

We’ve mentioned you can perform all the steps of credit repair at no cost -- but how exactly does this process work?

“There is no secret tool credit repair companies have that gives them the ability to do what consumers could otherwise accomplish on their own for free,” says Bruce McClary, vice president of communications at the National Foundation for Credit Counseling. “The only potential value presented by these offers is the fact that they are promising to do most of the leg work for you, but the value of that is even questionable based on how much they can accomplish.”

There are many things you can do on your own to work towards credit restoration, including:

  • Check your credit: Request your credit reports from all three agencies, Experian, TransUnion and Equifax, and examine them for errors. Through 2023, you can access your credit report from each credit bureau once per week, for free at
  • Dispute inaccuracies on your credit report: If you spot a mistake on your credit report, you can dispute an error at each of the three credit bureaus: Experian, TransUnion and Equifax.
  • Implement better financial habits: Making payments in full, on time, every single time is the best way to heal your credit score.
  • Keep your credit utilization rate low: Your credit utilization, how much debt you carry versus the amount you have access to, plays a large role in determining your credit score. It’s a good practice to keep your credit utilization below 30% -- and even lower to boost your score. So, if you have one credit card with a $1,000 credit limit, try not to use more than $300 in credit on that card.
  • Refrain from taking on additional debt: If you’re working on improving your credit score and paying down debt, try not to take on new debt, since this will only add to your balance.

How long does credit repair take?

To resolve all of your disputes, you can expect credit repair to take anywhere from three to six months. This timeframe largely depends on the scope of the work. If you only have a few minor blemishes to fix, it should take less time.

The bottom line

When you look at the services provided by credit repair companies and the fees they charge, you may find credit repair services aren’t worth the cost. In most cases, those funds would have a much bigger impact on paying down outstanding debt.


If the credit repair process feels too overwhelming to tackle on your own, don’t forget there are resources available to you. Credit counseling is a free service for anyone struggling with debt who wants to know more about their options. Some good options include the National Foundation for Credit Counseling and the Financial Counseling Association of America. You can also check the Justice Department website, where you can find a list of approved credit counseling services in every state.

This article includes some material that was previously published on NextAdvisor, a CNET Money sister site that was also owned by Red Ventures and which has merged with CNET Money. It has been edited and updated by CNET Money editors.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Lisa Bernardi is a freelance writer with a background in personal finance, insurance, and international business. Lisa's work has been published by NextAdvisor, Bankrate, and The Simple Dollar, among others. Lisa has lived in four countries, speaks three languages and holds two international degrees, including a master's in international business from Universitat Pompeu Fabra in Barcelona.