Is Credit Repair Expensive?

Credit Repair Expensive

Many consumers wonder whether hiring a credit repair company is worth the cost. The answer is that it depends on your unique situation and how much inaccurate information you want to have removed from your reports. However, if you can save money on interest rates with a higher credit score, it could be well worth the expense.

Typically, Credit Repair companies charge a monthly fee for their services. They work with the credit bureaus to dispute errors on your report and also contact the creditor that provided the information. They will try to get that creditor to remove the negative mark from your report, or at least amend it to be more accurate. The more accurate your credit report is, the higher your credit score will be.

Credit repair is not always successful. The CFPB warns that it can take time to get positive information added and negative items removed, so it’s important to be patient throughout the process. A good credit repair company should keep you updated on the status of your disputes and how long it will take to resolve them.

Is Credit Repair Expensive?

Before you choose a credit repair service, read the fine print to make sure they are following federal law. If they demand payment upfront or promise results that sound too good to be true, you should move on to another company. It is illegal for a credit repair company to ask you to provide false information or create a new identity.

The most common way a credit repair company charges is through subscription fees, in which they charge your credit card at the end of each month for services performed that month. This model may seem convenient, but it can lead to overpayment and credit card debt. In addition, companies with this business model often have a financial incentive to keep you as a customer for as long as possible.

Alternatively, credit repair services that specialize in debt settlement and debt relief may charge you a flat fee for their services. These services often help you negotiate with your creditors to have a collection or other negative item deleted from your credit report in exchange for the full amount of the debt. They also often charge a one-time fee for a complete credit analysis and customized dispute letters.

While it’s possible to repair your credit on your own for free, it can be a complicated and time-consuming process. Credit repair companies can take some of the burden off your shoulders by doing the work for you, but they will still charge a monthly fee to do so.

Before signing a contract with a credit repair company, check its licensing information to make sure it’s registered with the state in which you live and that they have an Australian Business Number (ABN). In addition, look for reviews from real customers and a clear explanation of their fees on the company’s website. Sky Blue Credit Repair and The Credit People are two top-rated options with low startup fees, as well as affordable monthly fees for their credit repair services.