Are Credit Repair Companies Worth the Fees They Charge?
August 31, 2007
Are people wasting their money when they pay a company to repair their credit? This question came up today when I discovered a coworker had previously worked at a credit repair company.
Credit Repair Services Provided
Based on what my co-worker learned in his time with the credit restoration company they did not provide a service that an individual with credit troubles could not do themselves. Here is the process they went through on behalf of a customer.
The first step was for a person with bad credit to request a copy of their credit report from the three major credit bureaus, TransUnion, Experian, and Equifax. The company then opened a dispute with the credit bureaus on several negative items from the report. The credit bureaus then had 30 days to contact the creditors and investigate the disputed items. Typically one or two of the negative items would be dropped from the credit report after this process. The credit restoration company would wait a period of time and then try again.
Waste of Money?
The fees for this service varied from $300 – $600 depending on the branch that did the work. From what I understand, the customers are basically just paying the credit restoration companies to do the legwork, there doesn’t seem to be a lot of added value other than having someone else go through the motions. It seems likely that if someone has credit problems, they’re probably not flush with money and they’d be better off doing the work themselves and using the fee they paid the credit restoration company to pay down their debts.
Am I off base? Do credit repair companies add more value than I just described for the money they charge?
All posts by Ben Edwards
Credit reporting companies must investigate the items you question within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider gets notice of a dispute from the credit reporting company, it must investigate, review the relevant information, and report the results back to the credit reporting company. If the investigation reveals that the disputed information is inaccurate, the information provider has to notify the nationwide credit reporting companies so they can correct it in your file..*
The only drawback to hiring credit repair companies to fix credit problems is that it is expensive when compared to doing it on your own, on average most companies will charge you a monthly fee for their service and most credit repair will take 3-6 months.
I would have thought that a credit restoration company does more then just this. Now that I know what they do I will do this on my own instead of going with a company. Thanks.
I am in that situation now, need my credit repaired and you guys are saying I can fix it myself. Well how, what do I do. Is it as simple as calling the company’s that have posted adverse reports, and asking them what it takes to remove them from my credit report. HELP HELP
They can’t do anything you can’t do for yourself. I would recommend getting a copy of your credit report and challenging any negative item on it, valid or not. Chance are, some of them will come off because they can’t be verified. Others that can be verified will be confirmed.
I believe that would depend on the particular company. It’s not only legwork, like you mentioned, but it also has to do with the years of experience and deletions that give the consumer a specific advantage over the tactics the credit bureaus attempt to use every single day.
Once a credit bureau recognizes the consumer does not know exactly what he/she is doing, they throw every stonewall tactic they can at him/her.
You’ll also want to check on the credit repair company’s stats. For example, we average over a 45% fix/deletion rate in the very first 45 days alone and our fees are more than the “small monthly fee’d companies” that limit their disputes but much less than you’ll find in the higher end market and their results are not that impressive.