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Many people do not completely understand what credit repair involves. Since most companies that offer credit repair services make a point not to provide a clear explanation, you should not feel bad if you do not understand it. By the end of this article, you will know exactly what credit repair is and will be able to determine if you need to pay for it.

What Credit Repair Involves

The simplest way to describe credit repair is removal of erroneous negative items. If you read brochures from credit repair companies, you may assume that the business has a special way of getting negative items removed from your report. Many of the popular scam artists use that line to create bait. While they may get some negative items removed, what they do not tell you is that they can only get inaccurate negative items removed.

For example, if you had a store charge card and had an unmanageable balance that you could not pay for several months, the negative report on that account cannot be removed until it expires. Most negative items including late payments, defaulted loans, repossessions and foreclosures stay on your credit history for seven years. Bankruptcies linger on your record for 10 years. Since only a small percentage of Americans have disputable negative items on their reports, you should not count on a repair company to be able to remove anything. However, you can save yourself plenty of money by disputing inaccuracies yourself.

When Negative Items Can Be Removed

In some instances, people are charged an erroneous amount of money. For example, if you have a landlord who is reporting inaccuracies on what you owe to the credit bureaus and you can prove that it is wrong, you may be able to get the item removed. As a rule, the burden of proof is on the creditor when you dispute an erroneous account or a wrongful charge. If the creditor can prove the debt’s validity, the item stays on your report.

If a negative account does not belong to you or was not authorized by you, a dispute is usually successful. Also, the dates of some negative accounts may be wrong. You can dispute these, and that can help improve your score if the debt should have already been removed or should be removed soon. In some instances, you may notice a debt for someone with a similar name. This occasionally happens when a credit bureau accidentally reports the debt to your record.

How Credit Repair Companies Work

Some companies provide more than one service. A basic credit repair company offers disputing services. Other companies may offer credit counseling and disputing. Several include score monitoring. In some cases, a company may offer debt settlement as well. This involves contacting creditors to settle a debt for a fraction of the amount owed. While the debt will usually remain on your credit report, a creditor who reads your report will see that it was settled. You can get free credit counseling, and you can settle or dispute debts on your own.

How To Repair Your Own Credit

If you have the time and energy to invest, you can contact your creditors to ask about settling old collections or debts. When you reach an agreeable amount, ask them to provide you with a signed fax stating that they will list the debt as “paid as agreed” after you pay. Many creditors are willing to do this to get their money.

To dispute an inaccuracy on your credit report, request a free copy of it from This is the only government-approved site. You are entitled to view your reports from each of the three credit bureaus once per year. There are options on each bureau’s screen to dispute errors. When you dispute them and provide any typed notes, the dispute will be noted on your credit report. The bureaus will give the creditors a certain amount of time to prove the debt’s legitimacy. If the debt is for someone else, it will be removed from your report quickly. You can log back in to a bureau’s site to see updates about your dispute without having to pay to see your credit report.

Legitimate Vs. Scam Credit Repair Services

If you do not have the time or energy to handle disputes yourself, you can hire a credit repair company. However, you must be sure that the service is not a scam. These are some signs of a credit repair scam:

  • You are pressured to pay upfront.
  • The company guarantees a quick and specific score increase.
  • The company claims to be able to remove any negative item.
  • The company tells you to dispute accurate but negative accounts.
  • The company tells you not to contact credit bureaus.
  • The company does not explain your rights to you.

Is Credit Repair Worth It?

When you have the money to spare and do not want to deal with disputes, credit repair may be a worthwhile investment. Several companies charge anywhere from $50 to over $100 per month for their services. Do not expect to see significant improvements for at least six months. For credit repair to work, you must avoid accruing new negative items and must also maintain on-time payments for accounts that are in good standing.