How Does Credit Repair Work? The Essential Facts
By Sandra Pearsons
Last updated 11/4/2019
Summary: Find out how credit repair companies remove negative items from your credit report step by step.
If you’ve had it up to HERE with bad credit wreaking havoc on your life, you might be considering credit repair.
Trouble is, you’re a bit sketchy about the whole thing. And you’ve got some questions.
For one thing, how does credit repair work?
Can I really trust them?
If your DIY efforts to fix your credit have gone nowhere, or if you’re too overwhelmed to start, it might be time to call in the pros.
In a recent study, we found that *48% of paying, credit repair clients got a 100+ credit score gain or more. If you don't have serious time to devote to your dispute letters, we recommend you hire the pros to help. Check out our #1 choice for professional credit repair.
The best credit repair companies can get harmful and potentially inaccurate information deleted from your credit report.
Yes, it’s legit. Yes, you can trust them. And yes, credit repair works.
Credit Knocks recently surveyed 500 Americans who paid for credit repair services about their experiences. Guess what we found?
48% of those who stuck with the service for at least 6 months saw a credit score increase of 100 points or more.
Intrigued? Let’s explore how credit repair works.
Credit Reports are King
People assume that mistakes on credit reports are rare, but that’s false. We can’t be sure exactly what the error rate is, but a study by the Federal Trade Commission found it to be about 1 in 5.
While that refers to any kind of error, the study found that 1 in 20 people have a mistake on one or more of their reports that could result in a negative financial impact.
What do we mean by a negative financial impact? Think paying a higher interest rate on a loan.
Let me be clear: mistakes on your credit reports can cost you money.
So what do we know?
- Errors on credit reports are alarmingly common
- These errors can harm your credit score and cost you money
- People procrastinate when it comes to reviewing their reports, so mistakes are often missed
These three factors create a market need for credit repair.
How Credit Repair Works — Step 1: Review All Three Credit Reports SUPER Carefully
When you decide to work with a credit repair company, the first thing they’ll do is pull a copy of your credit report from all three reporting agencies.
Then they review them in painstaking detail, looking for any hint of inaccuracy. They’ll consult you during or after this process to run potential errors by you.
And then there's the matter of YOUR ERRORS, such as late payments and collections. Can repair companies get those removed? Click here to see how they handle that.
Remember, errors are fairly common. They’ll focus on things like:
- Personal info (name, address, phone number, social)
- Ownership of debts
- Loan amounts
- Payment history
- Open/closed status
- Hard inquiries
- Bankruptcies and chargoffs
If it looks like there are potential mistakes, the credit repair people start to get really excited. It’s go time.
They’ll collect any documentation they need from you that helps prove something on your credit report is false.
Why is that important?
Because they’re about to launch into action on your behalf.
Step 2: Dispute Errors Fast
If potential mistakes are identified, the next step is to dispute them in writing.
Under the Fair Credit Reporting Act, consumers have a right to dispute any suspected inaccuracies on their credit reports.
Once an item is disputed, the credit reporting agencies are responsible for verifying the information and notifying the consumer, usually within 30 days.
Listen up, because this part’s important:
If they can’t verify a disputed item, they will have to delete or correct the item.
For example, if you dispute a charge off showing on one of your reports because you’re not sure it belongs to you, the credit reporting agency has to prove that it does. If they can’t produce that proof, it’s bye bye charge off.
You can file disputes yourself for free, but if you’re too busy for a DIY approach, credit repair companies can handle it for you.
Why is that easier?
They have dispute letter templates ready to go, they’re familiar with the laws and rules, and they know how to make them work in your favor.
Our #1 recommended credit repair company, usually gets the first round of dispute letters out within one week of signing up. That means you could start seeing results within a month.
They help remove:
The goal is to identify negative information that’s crippling your score and review it with you carefully, searching for any signs of inaccuracy.
What if the damaging item really is your fault? Click here to see how they handle that.
Step 3: Re-dispute with a Vengeance
When credit reporting agencies receive notice of dispute, they get to work conducting their own investigation. That usually means reaching out to the company that reported the disputed information to them.
For example, you might be disputing a late credit card payment showing on your TransUnion report.
Your credit repair company files a dispute with TransUnion, and TransUnion reaches out to the credit card issuer to verify the info. If the credit card issuer maintains that the payment was late, TransUnion considers it verified and doesn’t change your report.
Is your credit repair company going to accept that? I hope not!
They’ll get to work filing a re-dispute. If you have documentation showing an on-time payment, there’s a decent chance the re-dispute will be successful. Either way, it doesn’t hurt to try.
Credit Repair Companies know how to draft dispute letters, know what documentation to request from you, and know how to get it done fast. That’s why having them handle it is so much easier (although more expensive) than going it alone.
Step 4: Get Results
There’s no guarantee that credit repair will improve your credit score. It all depends on whether your reports contain possible inaccuracies that are harming your score.
If they do, there’s a good chance that a competent credit repair company will get them removed or corrected, which could give your score a boost.
Truth be told, sometimes they get items that probably aren’t mistakes removed!
Remember, if the credit reporting agency can’t verify disputed information within the allotted time frame, they have to delete or correct it — even if it really is yours.
That rule works in your favor, and credit repair companies know how to take advantage of it — legally, of course.
How Long Does Credit Repair Take?
That depends on your unique situation. If you have a ton of items to dispute, it’ll take longer than if you only had a couple.
Because the credit reporting agencies have 30 days to respond to a dispute, and because a re-dispute is sometimes required, it can take a few months to get results.
That’s a Wrap
There you have it: how credit repair works, in a nutshell.
Before you jump on the credit repair bandwagon, I’d be remiss if I didn’t clarify something: you can do all this stuff yourself.
That’s right. You can get copies of your reports, review them meticulously, and dispute any items you take issue with.
But if that sounds like too much work, it’s time to call in the pros. Check out our #1 recommended credit repair company and contact them to see how they can help.