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Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. SHARE: PhotoAlto/Frederic Cirou/Getty Images June 17, 2021 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Tim is a freelance personal finance writer and blogger with a particular focus on credit cards and consumer lending. In 2002, he stumbled upon a copy of "The Millionaire Next Door," by Thomas J. Stanley and William D. Danko, which ignited a passion for learning and sharing fact-based money principles. Tim has a passion for demystifying personal finance and helping people live their best lives. Antonio Ruiz-Camacho is senior director of content for and . He has more than 20 years of international experience leading content teams, focused on consumer advice, technology and immigration. Bankrate logo The Bankrate promise
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Credit repair companies offer to help you repair your credit score for a fee—typically about $100 a month. Many of these companies provide legitimate credit repair services, but unfortunately, many more are essentially a scam. Your credit score impacts whether or not you qualify for a credit card, apartment rental or loan, so if you’re looking for help to rebuild your credit, it’s essential to select a reputable and trustworthy credit repair company that will deliver on its promises. How to tell if a credit repair company is a scam or legitimate
One of the easiest ways to identify a scam credit repair company is if they violate statutes. CROA is a federal law that aims to protect consumers against scams by setting guidelines for what credit repair services can and can’t do. You’ll know a credit repair service is in violation of CROA if the company: Asks for payment before performing any work on your behalf Promises or guarantees to remove negative data on your credit report, even when it is accurate Asks or advises you to mislead credit reporting companies about one or more of your accounts Tells you not to contact credit reporting agencies directly Suggests or implies that you change or alter your identity to modify your credit history Advises you to enter false information on credit or loan applications Doesn’t provide you with a written contract detailing the services it promises to deliver and the terms and conditions of payment. If you encounter a credit repair service exhibiting any of the above red flags, you should probably look for a more reputable company or consider It’s important to note, even if you’ve already signed a contract, CROA provides you three days to cancel without charge. You can also vet a credit repair service by searching the Consumer Financial Protection Bureau’s (CFPBs) and reading company reviews on the website. Do credit repair companies really work
The best credit repair companies can often succeed in identifying and fixing factual inaccuracies and errors in your credit file. But no matter how many disputes a company files on your behalf, it’s unlikely that the credit bureaus will remove information your lenders accurately report. It’s worth pointing out that even the most reputable and trustworthy credit repair services can’t legally do anything you couldn’t do yourself. Remember, you can file disputes with the (Equifax, Experian and TransUnion) for free. When you file disputes with these agencies, they must investigate the accuracy of your report’s negative items. If your creditor can’t prove the information is correct, the bureau can remove the information from your credit file. Whether you repair your credit yourself or pay a service to do it for you, having a plan for repairing and maintaining your credit is essential. How to repair your credit yourself
If you have the time and inclination to repair your credit yourself, here’s how to do it: Get current copies of your credit reports
The first step to repairing your credit is knowing what needs fixing. Your credit report contains all the positive and negative information impacting your credit score. Review your report to identify the negative items which may be hurting your score. The law entitles you to a free credit report annually from each of the three credit bureaus. The most popular way to obtain your free credit report is through , a joint service from Experian, Equifax and TransUnion. The law entitles you to free credit reports from each of the three credit bureaus each year. Dispute errors on your credit report
for mistakes, including: Inaccurate personal data, such as aliases not attributable to you Incorrect dates or balance amounts Accounts that aren’t yours or duplicate accounts On-time payments wrongly reported as missing or late Collection accounts that don’t belong to you Dispute any errors you find directly with the three major credit bureaus. These agencies offer an online process to file disputes, which is often the fastest option to resolve an issue. When you , they must address the issue in 30 days or less. Make payment arrangements if necessary
Start your credit repair process by bringing your past-due balances current. The longer payments remain late, the worse the impact on your credit score. Devise a plan that allows you to pay at least the minimum payment for all your accounts. You may need to with your creditors to make it work, but there are no penalties for working out arrangements with your creditors. Improve your credit history
Your payment history accounts for about 35 percent of your FICO credit score. Even one late or missed payment may cause your score to drop. If you have delinquent accounts, bring them current as soon as you can and continue to make your payments on time each month. Making regular payments before their due date is one of the most common ways to impact your credit scores positively. Reduce your credit utilization ratio
The ratio of your outstanding credit card balances to your credit card limits is known as your . It measures how much of your available credit you are using. If the total of your credit card limits is $10,000 and your outstanding balances equal $2,500, your credit utilization ratio is 25 percent. The lower your credit utilization ratio, the better your score should be. While credit experts generally recommend keeping your credit utilization ratio under 30 percent, tend to use less than 10 percent of their total available credit limit, according to FICO. Seek credit counseling
If you’re struggling to pay off debt, consider getting help from a nonprofit . A reputable credit counselor can review your goals and help you devise a realistic plan to achieve them and restore your financial health. Visit the Department of Justice website for a in your area. How to repair your business credit
Just like with personal credit, you can pay for a credit repair company to clean up your business credit, or you can do it yourself. Although business credit scores are different from personal credit scores, the best practices to are basically the same as the steps to improve your personal credit, with a few exceptions: Pay attention to notifications
Business credit agencies often send you warning notifications when a derogatory mark is about to be added to your credit report. These notifications give the business owner time to become current on the delinquent account and prevent a negative mark from damaging your credit report. Repair business credit with debt validation letters
Dun and Bradstreet, Equifax and Experian are the three major credit agencies that keep reports on your business credit. If you wish to challenge inaccurate information on your report, you’ll need to create a debt validation letter, which is similar to a credit dispute letter. Send the letter to your creditor and credit bureaus since some creditors don’t report information to the credit agencies. Request removal of debt settlements from your report
Unlike a personal credit report, if you reach an agreement with a creditor to than the outstanding balance, you can have it removed from your business credit report. To initiate the deletion from your report, contact the business credit agency with the proper documentation that proves you paid the debt. The bottom line
The credit repair industry is known for scams, so it’s buyer beware for anyone looking to outsource their credit repair. Look for red flags of a scam, such as when companies ask for money upfront or if they promise to remove accurate information from your credit report. You may find legitimate credit repair services that comply with CROA standards. But whether they are legitimate or not, no company can legally do any work for you that you couldn’t do yourself for free. Filing disputes with the credit bureaus and exercising good credit habits are the best ways to repair your credit. If you want third-party help to address your credit issues, consider working with a nonprofit credit counseling service, which will likely provide more value than a credit repair company. SHARE: Tim is a freelance personal finance writer and blogger with a particular focus on credit cards and consumer lending. In 2002, he stumbled upon a copy of "The Millionaire Next Door," by Thomas J. Stanley and William D. Danko, which ignited a passion for learning and sharing fact-based money principles. Tim has a passion for demystifying personal finance and helping people live their best lives. Antonio Ruiz-Camacho is senior director of content for and . He has more than 20 years of international experience leading content teams, focused on consumer advice, technology and immigration. Related Articles