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MintLife Blog > Credit Info > Is Credit Repair Right for Me?

Is Credit Repair Right for Me?

Credit Info

Last week, I attended a credit repair bootcamp in Tampa, Florida. I made several presentations about credit reporting and credit scoring; there were roughly 200 credit repair companies in attendance.

What is a credit repair organization?

Credit repair companies, formally known as credit repair “organizations” in the Credit Repair Organizations Act (hereafter “CROA”), act on behalf of consumers and attempt to get negative, or otherwise offensive information, removed from their credit reports. In general, the credit repair industry, which is over two decades old, tends to have a fairly bad reputation, warranted or not. In fact, the Federal Trade Commission has called credit repair a “scam” and credit repair operators “con artists.”

How does credit repair work?

Credit repair companies don’t typically disclose their exact tactics, but most people believe they send dispute letters to the credit reporting agencies challenging the validity of negative information in hopes that the credit bureaus will be unable to verify its accuracy and then remove it, which is what the Fair Credit Reporting Act requires.

If you are wondering how prevalent credit repair disputes are, according to the Consumer Data Industry Association, the trade organization of the credit reporting agencies, credit repair disputes account for no less than 30% of disputes received by the credit reporting agencies. In a nutshell, the volume is staggering.

Credit repair services are not free, far from it. But, they’re not allowed to charge their customers until after services have been rendered. And, they cannot promise or guarantee the removal of negative credit information. They must also provide mandatory disclosures telling consumers they can dispute their own credit reports for free. Finally, they cannot tell you to simply dispute all of the negative items.

How is the industry regulated?

These aforementioned rules are straight out of the CROA, which is the Federal law that defines how credit repair organizations must do business in order to stay out of the FTC’s crosshairs. If the credit repair company charges you in advance for their services, or promises to get your bankruptcy deleted from your credit reports, then they’re violating Federal law. If they counsel you to dispute everything that’s bad on your credit reports, or they don’t tell you you can do it on your own for free, that violates Federal law, too.

How much does credit repair cost?

Most credit repair services are billed under one of two pricing structures: subscription and pay-per-deletion. The subscription pricing is, obviously, a monthly fee charged against a credit card meant to cover services rendered during the prior month. The pay-per-deletion model is a newer pricing structure and is the brainchild of the creator of a credit repair facilitation software.

Under the pay-per-deletion model, the client is only charged after a credit repair organization has successfully had negative information deleted from their credit reports. According to one company, “Pay-per-delete makes it easier for credit repair organizations to be fully compliant with CROA’s restrictions against charging fees prior to services being performed.”

Credit repair subscriptions generally run between $49 and $79 per month, but that can vary depending on the company. The average number of months consumers stick with the subscription is all over the place, but it seems to be somewhere between 8 and 18 months, depending on whom you ask. That means consumers are paying, on average, $64 per month for about a 13 months, or $832, for credit repair.

Outsourcing vs. DIY credit repair.

Still, the question remains: why would someone pay a credit repair company to send dispute letters to the credit bureaus when you can do it on your own for free?  The answer varies, depending on whom you ask. According to Kelly Wells, Owner of Credit Restoration of Washington, a credit repair company, “Consumers certainly can dispute items themselves and don’t have to hire anyone to act as their proxy, but do you really want to struggle with disputing inaccuracies and deal with the credit bureaus yourself or would you rather hire a professional to do it for you? That’s a question only the consumer can answer.”

According to another credit repair company, “A consumer navigating the credit repair process by themselves is equivalent to doing their own taxes. It’s ok if you have a 1040EZ, but if you run into issues, you might need to consult an accountant who knows how to navigate the 1,000 plus pages of tax code. The credit system is far more complex than anyone would have you think.”

When posed with the same question Chad Kusner, President of Credit Repair Resources, a credit repair company, said, “It depends. Everyone has different situations and events that bring them to our door.” He continues, “My company declines 18-22% of our applicants because there is not enough to warrant the investment in our services.”

The bottom line.

It sounds, on the surface, like the Do-it-Yourself credit repair model is always the way to go, but you’d be wrong drawing that conclusion. Dealing with the credit reporting agencies isn’t easy. Your well-written dispute letter to the credit bureaus is homogenized into a 3-digit code, which is then sent over the Internet using a system called E-Oscar to the company that furnished the offending credit entry, usually a lender or a collection agency. At that point it’s up to the furnisher to A) understand what you’re disputing and, B) take time to investigate your claim.

Once the furnisher replies to the credit reporting agency, the investigation is complete. You’ll get the results of the investigation mailed to you and you’ll either have to A) be happy with their results and live with them or, B) re-dispute the item.

This is where the process gets tricky. If you simply re-dispute the item, all you’re doing is repeating the same process. And, the Fair Credit Reporting Act allows the credit bureaus to consider your dispute to be frivolous if you simply repeat the same dispute over and over.

Technically, credit repair companies, can’t do anything you can’t do. However, they can facilitate the process of disputing and re-disputing the item when you’ve lost faith or patience in the system, or you just don’t want to deal with the hassle. The value of the facilitation, which can be pricy, is going to be up to you.

John Ulzheimer is the President of Consumer Education at, the credit blogger for, and a contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of or Intuit. Follow John on Twitter.




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