Can You Legally Charge for Credit Repair Services?

Learn about the legalities of charging for credit repair services and how much it typically costs.

Can You Legally Charge for Credit Repair Services?

Credit repair companies are not allowed to charge you in advance for their services. You should only pay for credit repair after the services have been completed. To get around this rule, some credit repair companies offer subscription plans where you pay a monthly fee for services provided the previous month. The cost of credit repair varies depending on the level of service you need.

In fact, you can even do the process for free if you take the time to repair your credit online. However, this will require more effort on your part to get the same results as a professional. Credit repair companies can provide advice and support when challenging inaccurate information, but they cannot delete any information that is accurate but damaging. If you decide to hire a credit repair company, you will have to pay fees which can vary greatly.

It is important to read the fine print to find out any additional fees that may be charged. Keep in mind that even if you pay to have information removed from your credit report, there is no guarantee that this will improve your credit score. By law, you are entitled to receive a free credit report from each of the three major credit bureaus (Equifax, Experian and TransUnion) once every 12 months. With a full credit repair service, you authorize the service to obtain your credit reports; in some cases, you may have to pay a fee for this step.

The Federal Trade Commission states that there is nothing a credit repair company can do for you that you cannot do yourself. Other companies offer credit score updates and may require that you stay registered and pay monthly fees until changes are reflected in your credit report. Credit repair is limited to removing inaccurate derogatory comments from your report; it cannot guarantee an increase in your credit score. With a better credit score, lenders will view you as more reliable and offer better interest rates on loans and credit cards.

You may also have an easier time getting financing. If you are unsure about how to handle your credit situation, consider working with a nonprofit credit counselor who can help you get back on track at an affordable price. Unfortunately, there are many scammers posing as legitimate credit repair companies. Be sure to check your credit score in another month or two to see if it has changed (not all errors will affect your credit rating).