Do credit repair companies help?

Repair companies help to repair credit. A bad credit score can cost you some serious cash. Over your lifetime, you can lose hundreds of thousands of dollars to a bad credit score.

That’s a pretty shocking number, and it should be. Bad credit means higher loan interest rates and higher insurance premiums and that all adds up over the years. Bad credit can hold you back from achieving major life goals like buying a house, going back to school, taking a dream vacation or even retiring on schedule.

But what if you have bad credit because there are errors on your credit reports? Or there’s something that’s decades old? Or a single item that’s appearing multiple times? It seems pretty unfair to pay more interest on a credit card, car loan and mortgage because the credit bureaus have wrong information about you in their files. You can go through a dispute process with each of the credit bureaus on your own, but many people either don’t have the time or don’t understand how to make their case. This is when many consumers start looking into hiring a credit repair company.

What Exactly Is Credit Repair?

You can DIY your credit repair or hire a credit repair company or law firm to work on your behalf to fix your credit. To get to the heart of what credit repair is and how credit repair companies operate, we went to Randy Padawer, Consumer Education Specialist with Lexington Law, which represents consumers who want to repair their credit.

“Credit repair leverages your legal right to three standards: Credit reports must be 100% accurate, entirely fair, and fully substantiated,” Padawer said. “Too many lesser credit repair companies skip over those last two standards — which involve communicating with your creditors — in favor of depending upon simple credit bureau disputes by themselves.”

A good credit repair company will first pull your credit reports from each of the three major credit reporting agencies to pinpoint your credit issues. Why all three? Because each credit reporting agency has its own “data furnishers” (aka lenders, credit card companies, debt collectors, etc.) who report your credit information to them. And there may be errors that appear on one of your credit reports, but don’t appear on the others.

Once those errors have been identified, you’ll then give a credit repair company any supporting documentation you might have or need. For example, if there’s a bill on your credit report that your husband was actually responsible for under your divorce decree, you can use that document to prove it shouldn’t be impacting you.