Many people are surprised to learn just how common credit report errors are—nearly one-third of consumers have at least one mistake on their credit report. 

These inaccuracies can pull down your credit score and create obstacles when you try to open a new line of credit, purchase a car or home, or secure affordable insurance premiums.

Financial hardships often strike unexpectedly. Unavoidable situations such as medical bills, divorce, or job loss can disrupt even the most carefully planned debt management strategies. When that happens, your creditworthiness often takes a hit, as late payments, charge-offs, collections, repossessions, and other negative marks pile up on your report.

While accurate negative items can’t be removed from your credit report, credit repair services can help you address credit report errors to improve your credit standing.

If you’re currently facing challenges due to bad credit, you may have come across credit repair companies that claim to help fix errors on your report and boost your score through different types of bad credit solutions. But what exactly do they do, and are they worth considering? Let’s find out.

What is a Credit Repair Company?

A credit repair company specializes in helping individuals improve their credit by identifying and disputing inaccuracies on their credit reports. These organizations are equipped with the expertise and legal knowledge to address credit issues that can be complex and time-consuming to resolve on your own.

Unlike credit counseling agencies, which focus on broader financial advice like budgeting or reducing interest rates, credit repair companies target specific credit report errors. Their primary goal is to remove erroneous negative marks on your credit report that could be unfairly affecting your credit score.

Is Credit Repair Legal?

Yes, credit repair is entirely legal. Credit repair companies are regulated by the Federal Trade Commission under the Credit Repair Organizations Act (CROA). 

Under the Fair Credit Reporting Act (FCRA), you have the right to an accurate credit report and the ability to dispute errors. While you can dispute inaccuracies yourself, hiring a professional credit repair company can streamline the process from start to end.

However, not all credit repair services are created equal. Credit repair scams do exist, so it’s important to distinguish legitimate businesses from fraudulent ones to protect your financial interests.

How Do Credit Repair Companies Work?

The process starts with the credit repair company gathering your credit reports from the three major bureaus. Credit repair experts meticulously review your reports to identify searching for errors such as: