Credit Repair Statistics: 2019 Study Reveals Its Cost & Effectiveness
In October 2019, Credit Knocks surveyed 500 Americans (ages 25+) who had paid for professional credit repair services to learn about their experience and results working with credit repair companies.
Our goal was to determine the actual impact credit repair companies have on the consumers they help.
We wanted hard statistics that showed:
Not Our Intention:
It was decidedly NOT our goal to prove that credit repair services have a positive impact on their clients' credit scores. We are neutral on the matter at Credit Knocks, as we first promote do-it-yourself credit improvement tools, and only recommend repair services to people who truly have zero time (or desire) to work on their credit.
Study Contents Menu:
Please feel free to use the quick skip links above, or browse at your own pace.
Here were our key findings:
Report Key Findings
Effectiveness of Credit Repair:
Cost of Credit Repair:
Customer Experience of Credit Repair Companies:
Cost of Credit Repair: 2019 Statistics
How much does credit repair really cost?
We've got the answer!
What Counts as "Credit Repair?"
Credit repair in our study referred to paying a professional service to clean up a consumer's credit report (such as removing collections or late payments) with the goal of increasing their credit score.
Examples of popular credit repair companies are: Lexington Law, CreditRepair.com, and Ovation
To ensure we only surveyed credit repair clients, we added knockout questions to our survey that eliminated consumers who had used free or paid services such as:
- Free or paid credit score services - (Credit Karma, Credit Sesame, MyFico)
- Bank, Credit Union, or credit card scores
- Credit Bureau scoring or credit report services
Statistics on the True Cost of Credit Repair in 2019
We did not visit any credit repair companies' websites to bring you the trust cost of credit repair. These are the results from our actual surveyed consumers who paid for credit repair.
Here are the numbers:
But of course the amount spent correlated with how long the respondents stuck with their repair company. See this chart:
Here are the top answers to how long our respondents used their credit repair company:
- 3 to 5 months - 31%
- 6 to 9 months - 23%
- 1 to 2 months - 22%
- 10 months or more - 18%
As shown in the chart above, we found a strong correlation between the duration a consumer worked with the credit repair company and the amount of money they spent. Here are some statistics on that:
Credit Score Gains from Credit Repair
We also wanted to find out if credit repair companies really work. To find this out, we asked our survey subjects:
- what their credit score was prior to working with their company
- overall impact to their score
- and their current credit score
Overall, we found strong evidence to support the claim that credit repair companies have a positive impact on their clients' credit scores, particularly when spending more time with a client.
We also found a correlation between the length of time a consumer stayed with their repair company and higher increases in credit score.
- 48% of respondents who used credit repair services for 6 months or more got an increase of 100 points or more to their credit score
- This dropped to 33% if the respondents only used credit repair services for 1 to 2 months
Marketing Analysis: How Consumers Find Credit Repair Companies
We also asked how the respondents first found their credit repair company. Here were the answers from highest to lowest percentage:
- Online search - 45.4%
- Referral - 37.2%
- Advertisement - 13.4%
- Phone Solicitation - 2.8%
- Other - 1.0%
We dove deeper into the top two sources of clients for credit repair companies (online search and referral), and discovered the following:
*We've combined respondents who found their company via Advertisement or Phone Solicitation in our results above for greater statistical significance. We only had 14 respondents (2.8%) who became a client through phone solicitation.
Services Received by Credit Repair - The Stats
Perhaps you're wondering what credit repair companies actually do for their clients.
Credit repair companies are mostly known for helping their clients remove inaccurate or damaging items from their clients' credit reports.
However, many of them claim to offer a host of other services from credit counseling to identity theft recovery.
We asked our respondents what their credit repair company actually did for them, and here were their answers.
Top services received:
- Removed negative items (late payments, collections, charge offs) - 56.2%
- Credit consulting - 49%
- Set up payment plan with creditors - 48%
- Debt consolidation - 46.6%
- Sent dispute letters to the credit bureaus - 39.8%
- Sent "Goodwill letters" to creditors - 28.6%
- Sent cease and desist letters to creditors - 24.8%
- Identity theft recovery - 21%
Of these services, the respondents who had "goodwill letters" sent to their creditors on their behalf reported the best overall experience (76% reported an overall "good" or "excellent" experience). This group also contained the highest percentage (54.5%) of people whose credit scores improved by 100 points or more.
We also asked which items the credit repair companies were able to successfully remove from their credit report.
Here were the top 8 answers starting with the most prevalent:
- Collections - 55.2%
- Late payment - 53.6%
- Medical bills - 43.8%
- Charge offs - 30.6%
- Inquiry - 25.8%
- Judgments - 20.8%
- Student loans - 17.8%
- Bankruptcy - 11.2%
Respondents who received Bankruptcy recovery services raised their scores higher than the recipients of any other services, with 53.5% reporting a 100+ point gain.
Customer Experience Statistics
Sometimes the financial industry takes shots at and casts a negative light on credit repair companies. We wanted to know how actual credit repair clients felt about the service they received.
We asked their opinion on:
- their overall experience
- the company's business practices (marketing, customer service, billing, etc)
- if they were charged for anything they felt was inaccurate
Here's what we found:
We also found that clients' overall opinion of the credit repair company was much more favorable if they received a nice credit score increase. See the chart below.
We were not happy to see that among credit repair clients, a sizable portion feel their company was shady, borderline illegal, and experienced billing problems.
We were not happy to see some of the damning results from this study. Many of our respondents reported billing inaccuracies, a problem that must be corrected. Imagine if only 55% of Netflix subscribers reported correct billing. That would not be very good. Yet, that's the unfortunate statistic we have for credit repair companies.
Having said that, the study provides overwhelming evidence that professional credit repair companies do make a positive impact on the credit scores of their clients. There is also a significant correlation between the amount of time a client sticks with their repair company and bigger credit score gains.
If consumers do seek credit repair services, we recommend that they proceed with caution, research the best companies online, and ask around for referrals. If they move forward, they should plan to stick with the company for several months for best results.
All the data included in this study is available via public domain. This means all statistics may be copied without permission. We do, however, appreciate citation as the source via a link.