How to judge credit repair companies before you sign
Judge credit repair companies by three things: when they ask for money, what they promise, and whether they explain your legal rights before you sign. A company that wants payment up front, promises results, or tells you not to contact the credit bureaus is showing the warning signs the FTC lists. Here are those signs in the FTC's own words, what federal law requires, and the questions worth asking.
- Free consultation
- Equifax, Experian and TransUnion reviewed
- Only inaccurate or unverifiable items disputed
- Your rights explained in plain words
How should you judge credit repair companies?
Start with money, then promises, then rights. A company that charges before it performs a service is breaking federal law. A company that promises a set score, or that a particular collection will vanish, has no way to keep that promise, because only the credit bureaus decide what stays after an investigation. And a company that skips over your rights, especially the right to dispute errors yourself for free, is leaving out the most useful fact you could hear.
Searches for professional credit repair often lead to pages full of client counts and before-and-after scores. Those numbers cannot be checked, and federal rules say a company may not lie about what it can do. Judge a company by its contract and its explanations instead, and you will learn far more.
What warning signs does the FTC list for credit repair scams?
The FTC names six signs, and any one of them is reason to walk away.
"Scammers insist you pay them before they help you. / Scammers tell you not to contact the credit bureaus directly. / Scammers tell you to dispute information in your credit report you know is accurate. / Scammers tell you to lie on your applications for credit or a loan. / Scammers tell you to file a false identity theft report. / Scammers don't explain your legal rights when they tell you what they can do for you."
Source: Federal Trade Commission, Fixing Your Credit FAQs, November 2023.
Several of these signs can hide in friendly language. "Let us handle the bureaus so you don't have to" can turn into "don't contact the bureaus." "We'll dispute everything negative" means disputing accurate items too. A suggestion to report identity theft for accounts you did open is a request to file a false report, with legal risk falling on you, not the company.
What does the Credit Repair Organizations Act require of credit repair companies?
The Act sets the ground rules every company in this business must follow. It controls when a company can be paid, what it must tell you in writing, and how you can back out.
- Payment
- Not before the service is fully performed
- Rights statement
- A separate written document
- Cancellation
- Any reason, within 3 business days
- Enforcement
- FTC oversight and your right to sue
"No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed."
Source: 15 U.S.C. 1679b(b), via Cornell Legal Information Institute.
"(b) The written statement required under this section shall be provided as a document which is separate from any written contract or other agreement between the credit repair organization and the consumer"
Source: 15 U.S.C. 1679c(b), via Cornell Legal Information Institute.
The FTC sums up the same rules in plain terms: it is illegal for these companies to lie about what they can do or to charge before they help, and they must tell you about your three-day right to cancel and give you a written cancellation form. Our your rights page prints the full statement.
Which questions should you ask a credit repair company?
Ask these questions on the first call and listen for direct answers. Vague replies are an answer too.
- When exactly will you charge me, and for which completed service?
- Will you give me the written rights statement and the contract to read before I sign?
- Which entries on my reports do you think are inaccurate, and why?
- Which entries do you think are accurate, and what will you do about them?
- Will you tell me what I could do myself for free?
- Will I see copies of every dispute letter and every bureau response?
- How do I cancel, both inside and after the three-day window?
- Do you ever promise a specific score, or that an item will come off my report?
A good answer to the last question is a plain no. Questions about services offered by credit repair companies come up often, and the honest list is short: reviewing reports, preparing disputes, following up and explaining results.
What can a legitimate credit repair company actually do for you?
It can do the work you are entitled to do yourself, with more organization. That means reading all three reports, finding entries that look inaccurate, incomplete or unverifiable, writing disputes with copies of your proof, tracking the bureau responses and explaining each one. Our page on how credit repair works shows that process step by step.
"You have a right to dispute inaccurate information in your credit report by contacting the credit bureau directly. However, neither you nor any ‘credit repair’ company or credit repair organization has the right to have accurate, current, and verifiable information removed from your credit report. The credit bureau must remove accurate, negative information from your report only if it is over 7 years old. Bankruptcy information can be reported for 10 years."
Source: 15 U.S.C. 1679c(a), via Cornell Legal Information Institute.
Some people searching for credit repair consultants actually need a different kind of help. If the real problem is debt you cannot keep up with, read our comparison of credit counseling vs credit repair. If the file is simply thin, our guide on how to build credit from scratch fits better than any dispute.
How do you complain about a credit repair company or a credit report?
Complaints about a credit repair company go to the Federal Trade Commission, which oversees the industry. Complaints about a credit report go to the Consumer Financial Protection Bureau, after you dispute with the bureau first. Federal law also lets you sue a company that violates the Credit Repair Organizations Act.
"The Federal Trade Commission regulates credit bureaus and credit repair organizations."
Source: 15 U.S.C. 1679c(a), via Cornell Legal Information Institute.
The CFPB's complaint portal lists credit reports among the products it accepts and asks you to dispute inaccurate or incomplete information directly with the reporting agency before filing. Keep copies of your dispute letters, the bureau's answers and any contract you signed, because every complaint goes further with documents attached.
Want to see how scores react to what is on the report? Our guide on what affects your credit score explains the factors without the sales pitch.
Questions about choosing a credit repair company
Are credit repair companies legal?
Yes. Federal law, the Credit Repair Organizations Act, allows credit repair companies to operate and sets rules for how they do it: a written rights statement, a three-business-day cancellation right, and no payment before a service is fully performed. The law also bans deceptive practices. Legal is not the same as necessary, though, because you can dispute errors yourself for free.
What should a credit repair contract include?
Read it for a clear description of the services, how and when you will be charged, and how long the work is expected to take. Federal law also requires a separate written statement of your rights, and the FTC says the company must tell you about your three-day right to cancel and give you a written cancellation form. Do not sign anything you have not read in full.
Can a credit repair company dispute accurate information?
It should not, and the FTC treats it as a scam sign when a company tells you to dispute information you know is accurate. Accurate, current and verifiable information is not something anyone has the right to have taken off a report. A company worth hiring will tell you which entries look accurate and leave those alone.
What is the difference between a credit repair company and a credit bureau?
A credit bureau, such as Equifax, Experian or TransUnion, collects account data from lenders and sells reports. A credit repair company works for you, reviewing those reports and helping you dispute entries that look wrong. A credit repair company cannot change a report directly. Only the bureau, after investigating, can correct or delete an entry, and it must do so for free when you dispute.
How do I cancel a credit repair contract?
Within three business days of signing, you can cancel for any reason under federal law, and the company is supposed to give you a written cancellation form for that purpose. Keep a copy of what you send and note the date. After that window, cancellation depends on the contract terms, so read that section before you sign rather than after.
Where can I report a credit repair company?
The Federal Trade Commission regulates credit repair organizations, and you can report a company you believe broke the rules to the FTC. Federal law also gives you the right to sue a credit repair organization that violates the Credit Repair Organizations Act. For problems with a credit report itself, the CFPB accepts complaints after you have disputed with the bureau.
Start with what is actually on your reports
The first conversation is free. We sort each account into possibly wrong, possibly unverifiable and accurate, and explain your options, including the free ones.
Not sure what your credit reports say?
A consultation costs nothing and commits you to nothing. We read the reports with you, point out entries that look wrong or unverifiable, and tell you which steps you can take on your own.