Guide to Credit Repair

Credit repair involves addressing issues in your credit history that negatively impact your credit score. These issues might include errors on your credit report, the aftermath of identity theft, or the effects of financial missteps from the past. Essentially, it’s about ensuring your credit report accurately reflects your current financial situation.

If you’ve struggled with low credit scores, confusing reports, or negative marks, you’re not alone. In this guide, we will walk you through everything you need to know about repairing your credit and taking control of your financial health.

The Credit Repair Process in the U.S.

The credit repair process in the United States involves several steps aimed at fixing your credit. It can be undertaken by an individual or with the help of a credit repair company. Here's an overview of the typical process:

Analyze Credit Reports:The first step involves obtaining and reviewing credit reports from the three major credit bureaus. These reports should be carefully examined for any inaccuracies, errors, or negative items that are dragging the credit score down.
Identify Errors:This step involves looking for any incorrect information in your credit report, such as inaccurate accounts, duplicate accounts, accounts that do not belong to you, missing accounts, inaccurate inquiries, derogatory marks, delinquencies, or fraudulent activity.
Dispute Credit Report Errors:Once you have identified errors, you can challenge them with the relevant credit bureau and/or the business that originally reported the information. You must write letters to both the credit bureau and the business that reported the information.
Create a Credit Repair Plan:After identifying errors and legitimate issues, an action plan is created to resolve them. This plan may involve prioritizing which items to address first, setting up payment plans, and developing strategies for improving financial habits for the best results in the long run.
Address Negative Items:The credit repair process also involves addressing negative items on your credit report which may include collections, late payments, charge-offs, bankruptcies, and repossessions. Negative items can be disputed with credit reporting agencies and creditors if they are inaccurate, unfair, or unverified. While accurate negative information cannot be removed before the legally mandated time period of 7 to 10 years, credit repair focuses on disputing items that are inaccurate, unfair, or unverified.
Improve Financial Habits: In addition to disputing errors, credit repair also involves adopting better financial habits, such as making timely payments, reducing credit card balances, and avoiding new debt.

When Should You Consider Credit Repair?

Credit repair is particularly useful if poor credit is standing between you and your goals, such as securing a mortgage, car loan, or lower interest rates.

Repairing your credit can make better financial opportunities available. This can save you money in the long run.

How Long Will It Take to Repair My Credit?

The timeline for repairing your credit can vary widely depending on your unique credit situation. The dispute process with credit bureaus can take several months or more. Credit bureaus are required to investigate disputes within 30 to 45 days, but the whole process could take longer.

If your credit report contains multiple inaccurate negative items, it could take even more time to see results from DIY efforts or professional credit repair services. On the other hand, accurate negative marks—such as missed payments, charge-offs, repossessions, or collection accounts—can remain on your report for 7 to 10 years; however, such derogatory marks will gradually have less impact as time passes.

There are no specific guarantees on the time it will take to see an improvement in your credit score, because every situation is different. Factors like the number of errors or how long inaccurate items have been on your report will impact the timeline.

How Much Does Credit Repair Cost?

If you decide to use a credit repair company, you should know about the costs. Many credit repair companies charge an initial set-up fee, along with monthly service fees. The set-up fee can be up to $100, and monthly fees typically range between $50 and $100.

Prices can vary depending on the credit repair company and the complexity of your credit situation. Some companies might charge a flat fee, while others charge per negative mark, or a monthly payment. It's important to choose a service that starts the process at no cost and allows you to cancel anytime.

Credit Repair vs. Debt Settlement vs. Credit Counseling

Credit repair, debt settlement, and credit counseling are distinct services that address different aspects of an individual’s financial health.

Credit repair is primarily focused on correcting inaccurate negative information and other errors on your credit report. This involves disputing negative items with credit bureaus and creditors to ensure your report is as accurate as possible.

Debt settlement involves negotiating with your creditors to pay off your debt for less than the full amount owed. This can be a strategy for people struggling with overwhelming debt.

Credit counseling is a service that provides financial education and guidance. Counselors can help you create a budget, manage debt, and make informed decisions about your finances. Credit counseling does not directly affect your credit report, but it can help you develop healthier financial habits that ultimately improve your credit score over time.

What is the Role of Credit Repair Companies?

Credit repair companies assist by:

Reviewing your credit reports for errors.
Filing disputes with credit bureaus on your behalf.
Communicating with creditors to resolve issues.

Key Factors That Affect Your Credit Score

Your credit score is a three-digit number that reflects how creditworthy you are. FICO and VantageScore are the two main scoring models. Both models consider a few factors to calculate your credit score. Here are the factors for a FICO score:

Payment History (35%): Making on-time payments is important.
Credit Utilization (30%): Keep usage below 30% of your credit limit.
Length of Credit History (15%): Older accounts contribute positively to your credit history.
New Credit (10%): Avoid frequent credit applications to avoid too many hard inquiries.
Credit Mix (10%): A variety of credit types can help.

Does Checking Your Credit Hurt Your Score?

Checking your own credit report is considered a "soft inquiry" and will not lower your credit score. Soft inquiries are when you or a company check your credit for informational purposes, not when you are applying for credit. Such inquiries do not impact your credit score.

However, when a financial institution or company checks your credit as part of a loan or credit application, that is considered a "hard inquiry". Hard inquiries can have a slight negative impact on your credit score.

While frequent applications for new credit can hurt your score, checking your credit report regularly is a good practice that helps you stay informed about unsubstantiated negative items, errors, or sudden drops in your credit score.

Is Credit Repair Legal?

Yes, credit repair is completely legal in the United States. However, companies that offer credit repair services must abide by state and federal laws.

The Fair Credit Reporting Act (FCRA) and the Credit Repair Organizations Act (CROA) are the two main laws that protect consumers as far as credit reporting and credit repair services are concerned. These laws are designed to ensure fairness, accuracy, and transparency in the credit industry.

What is the Fair Credit Reporting Act (FCRA)?

The FCRA governs credit bureaus and lenders. This act primarily regulates credit bureaus and furnishers of credit information, such as lenders and financial institutions. It grants several important rights to consumers.

The FCRA ensures that credit bureaus provide you with a free credit report each year and that they verify the accuracy of the information on your report. It also gives you the right to challenge errors or inaccurate negative items and even seek damages for violations of the FCRA. Both the credit bureau and the business that supplied the information about you are responsible for correcting inaccurate or incomplete information in your report.

What is the Credit Repair Organizations Act (CROA)?

The CROA specifically regulates credit repair companies. It sets legal guidelines that these companies must follow when working with their customers to prevent fraud and scams. Some of the key provisions of the CROA include:

No Advance Payments: Credit repair companies cannot ask for payment before they have provided services.
Written Contracts: Credit repair companies must provide a written contract to their customers. This contract should detail the credit repair services they will provide, the total cost, how long it will take to get results, and the consumer's right to cancel.
Cancellation Rights: Customers have the right to cancel their contracts within three days without any charge, and the company must provide a written cancellation form.
No Guarantees: Credit repair companies cannot guarantee the removal of negative items from a credit report.
No New Credit Profiles: They cannot offer to create a new credit profile or hide a bad credit history.
Restrictions on Misinformation: Credit repair companies are prohibited from asking consumers to lie or misrepresent information about their credit history.

DIY Credit Repair: How to Fix Your Credit On Your Own

You absolutely can repair your credit on your own. Start by getting copies of your credit report and disputing any errors. Beyond that, you can improve your credit by following these guidelines:

Make timely payments
Reduce credit utilization
Limit new credit applications
Consolidate debt, if needed
Maintain older credit accounts
Practice responsible financial habits

How Do I Know If a Credit Repair Company Is Legitimate?

Consumers keen to repair their credit must know how to distinguish between legitimate credit repair companies and potential scams. Reputed credit repair companies are transparent about what they can and cannot do for you. They’ll clearly explain your legal rights, provide a written contract outlining their credit repair services, fees, and cancellation policies, and, most importantly, never ask for upfront payments.

A legitimate credit repair company won’t make unrealistic promises. Be wary of scams that guarantee results like, “Increase your credit score by 100 points in 6 weeks!” or “Guaranteed credit score improvement in 2 months!” Credible companies know that improving credit takes time and varies depending on individual circumstances.

Red flags to watch for include companies that promise to create a new credit identity, advise you not to contact credit bureaus directly, or encourage you to dispute accurate information to increase your credit score quickly. Scammers often use illegal tactics, such as stolen Social Security Numbers or fake EINs, to create new credit files—practices that can harm you and violate the law.

At AMERICA CREDIT CARE, we focus on ensuring that your credit report reflects accurate information and work with integrity to help you achieve a healthier credit profile. We’re upfront about our process, so you can feel confident that you’re in good hands.

What Can I Do to Maintain Good Credit After It’s Repaired?

Once you've repaired your credit, the best way to keep it in great shape is to adopt smart financial habits and stay proactive.

Start by paying all your bills on time—your payment history is the biggest factor influencing your credit score. Keep your credit utilization low by maintaining low balances on your credit cards, and avoid taking on unnecessary debt.

Be mindful of how often you apply for new credit, as too many hard inquiries can nudge your score down. Make it a habit to regularly review your credit reports to spot errors or inaccuracies early on.

You can also create a budget to stay on top of your expenses and income; this will make it easier to manage your finances. If possible, look into additional income streams to reduce reliance on credit for emergencies or large purchases.

We have many years of experience in evaluating credit and guiding consumers to assert their legal rights. We do it every day! We guarantee honesty and dependability, virtues which most people seem to have forgotten.

Company

Home

Client Login

Pricing

Partner Program

Support

Contact Us

I agree to terms and conditions provided by the company. I agree to receive notification messaging from AMERICA CREDIT CARE at the phone number provided above. I understand I will receive up to 10 messages a month, data rates may apply, reply STOP to opt out.