Companies Want To Make Your Problem Their Business

If you’re one of the many American’s whose bad credit has prevented you from purchasing a home, getting a credit card or qualifying for a lower interest rate, paying someone to fix your credit probably sounds pretty appealing.


The good news is that a quick Google search of “credit repair services” will provide you with websites for numerous companies claiming to do just that. The bad news is that most of these services are not what they are cracked up to be.

That’s because if you have legitimate credit problems due to late payments or other credit-damaging behavior, there isn’t much anyone can do.

“If the information in your credit report is correct and has been verified by a credit bureau there is no legal way to rectify that other than time,” says Bill Gustafson, senior director of the Center for Financial Responsibility at Texas Tech University.

As with points on your driver's license, all you can really do is wait it out. Credit reporting agencies generally keep negative credit information, such as missed payments, on file for seven years. Certain information, such as bankruptcies or unpaid tax liens, can be kept 10 years or longer.

So what exactly do these credit repair services do? Catherine Williams, vice president of financial literacy with Money Management International, says that generally they play off of a rule in the Fair Credit Reporting Act that allows you to dispute information on your credit report that you believe to be incorrect.

The credit repair clinics, she says, bombard credit agencies by writing dispute letters -- on correct and incorrect information -- in the hope that negative information will eventually be removed from your report. She adds, however, that with most credit disputes now resolved electronically, “less than 5% [of letters disputing correct information] are effective.”

That said, let's take a look at some of the online services available.


One such website,, says is removes negative inaccurate, unverifiable and incomplete information from your credit reports, including charge offs, bankruptcies, judgments, repo's, foreclosures, collections accounts, student loans, tax liens, and slow pays. This service, which charges $59 a month, even warns consumers to “stay away from extremely low- cost fee credit repair companies! The only reason they can offer their services at such low prices is because they only dispute a limited amount of accounts (usually five) on one credit report at a time. We on the other hand dispute all negative accounts on all three bureaus on the very first step.”

Meanwhile, repairyourbadcredit.comoffers a similar services for a one-time setup fee of $19 and three payments of $89. For this, the company says you can expect to begin seeing a noticeable difference in your credit in three months. The company even provides an example: “Let's say your credit report shows you have late payments on your credit card three months in a row back in 2006. We'll dispute your Visa or Master Card company. asking for proof of this. The fact is, either they'll not respond with the right evidence because they have no record of the item, or not bother with our dispute at all. Then just like that, the three months of late payments, according to your credit record, never even happened. By law it has to come off your credit record.”

If you sign up at, the company says it can repair your credit in a matter of weeks by helping dispute negative items such as late payments, collections, charge offs, bankruptcies, repossessions, foreclosures, and judgments. It also says there are no hidden fees and the removals are unlimited, but you have to sign up with your name and email address before getting an estimate of how much the services cost.

While these services can’t magically help your credit score as you they may lead you to believe, they might have limited value for some consumers. For instance, they could help you track down erroneous information on your report or provide some advice on how to avoid further detriment.

“Often they make you aware of your credit problems and are able to tell you what you’ve done wrong,” says Gustafson, adding that for some people it might make sense to pay a modest fee for this. According to the Better Business Bureau, though “everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost.”

Should you do decide to use one of these credit report services, the Federal Trade Commission (FTC) offers the following warning signs to help you decipher between legitimate services and scams. According to the FTC, you should avoid:

  • want you to pay before they provide any services.
  • do not tell you your legal rights and what you can do for yourself free.
  • recommend you not contact a credit reporting company directly.
  • suggest you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
  • advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.

If you decide to deal with your credit on your own, the first step should be to get a copy of your credit report. You are entitled to one free copy of your report every year from each of the three credit reporting companies -- Equifax, Experian, and TransUnion. You can attain a copy by going to the website -- Beware of imposter sites that sound similar or claim to offer copies of your report for free.

Once you have a copy of your report, carefully look over it for any incorrect information. If you find something, write to the consumer reporting company explaining the error and inform the creditor as well. Be sure to include original documents or other evidence that could help prove your claim.

The FTC’s website provides detailed information on how to dispute information on your credit report that you believe to be incorrect. They even offer a sample letter that you can use to help write a dispute. The FTC website, along with the Federal Reserve website also offers plenty of information to help you better understand your credit report and how to improve your credit over time.

While doing it on your own may take some more time and a little bit of legwork, it will save you money and provide you with priceless information that can continue to help you for the rest of your life.