Credit Tips

What to Look for (and What to Avoid) in a Credit Repair Agency

When it’s time to tackle your credit problems and raise your credit score, you need to know what to look for in a credit repair agency. This is especially the case if you have items on your credit report like bankruptcy, judgments, or liens. In those instances, you need a credit repair agency that can deliver results.

Once you decide that you’re going to go the professional credit repair route, it’s important that you take the time to find a reputable business, or an individual who has a good reputation. A bad credit repair experience often worse than doing nothing at all. So before you sign on the dotted line, take some time to understand your options and make the right choice.

Good Credit Repair Agencies

While most people don’t need a lawyer to repair their credit, it doesn’t hurt to have legal expertise. In fact, many of the best credit repair agencies have lawyers or legal professionals specializing in consumer law on staff.

Some of the top companies we’ve reviewed include Lexington Law, Ovation, Sky Blue, just to name a few. What good credit companies all have in common is years of experience and excellent Better Business Bureau records.

And while you can’t please everyone 100% of the time, these companies also have pretty good reviews and customer comments on websites other than their own. As far as pricing, the top credit repair agencies have prices that are reasonable, and most do not lock you into long term contract so you are free to cancel at any time.

But what should you do if you want to hire a local company rather than online? The same rules generally apply — look for expertise, good reputation, and a clean record at the BBB. But for a local credit repair agency, you’ll also need to look deeper.

Scam artists like to open new businesses, take in as much money as possible, and disappear all within the space of a few weeks or months. So if you’re looking for a local credit repair agency, be very wary of anyone who hasn’t been in business for more than a year.

Many of the better credit repair agencies offer free consultations so you can get an idea about their expertise before you even do business. If the company is open to your asking questions, and they are willing to share knowledge with you about how they can help repair your credit, chances are good that they are reputable.

What signs can you look for to spot a shady credit repair agency?

For every good credit repair agency, there are probably dozens of less than legitimate businesses trying to convince you they are your answer to a bad credit score. It has gotten so bad that the FTC launched ‘Project Credit Despair’ in 2005 to catch credit repair scammers. By 2006, 20 credit repair scammers were being charged, and the FTC is working to permanently bar them from doing business again. The FTC is also working to get people their money back, but more often than not, once you lose your money to a scammer pretending to be a credit repair professional, it’s gone.

Is This a Bad Credit Repair Agency? What to Look Out For

A bad credit repair agency will make claims like ‘We can create a new credit identity for you, legally!’ and ‘We will erase your bad credit forever!’ They’ll always discourage you from trying to do anything yourself.

Instead of trying to help you reorganize your finances, track down errors and correct them, they claim to just clean up your record – often without any details as to exactly how they’re going to do this.

No one can remove accurate and timely negative information from your credit report. Period. It has to be over seven years old, or ten years if it’s a bankruptcy, before it can be eased off the record. But the scammers hope that you will just believe the hype and pay up for credit repair that is not forthcoming. Here’s how to protect yourself.

Know the Warning signs:

They demand that you pay for services before they actually provide any services.

They avoid talking to you about what you can do for yourself, free of charge.

They advise you to “dispute everything” whether it is legitimately owed or not.

They want you to create a new identity and credit history using an employer identification number instead of your SSN. (This one should send up huge red flags. Never agree to this and always report the company to the FTC. Creating a new credit identity is fraud and if you go along with it, could result in you being prosecuted.)

They don’t want you to contact the credit bureaus yourself directly and say it will harm your chances of getting credit repair.

Any of these warning signs likely means you are talking to a con artist and not a credit repair specialist.

A legitimate credit repair agency is a business, and while they do want to make money, they will only do so by providing legal and ethical services. Their business is helping you get your credit restored and under control with counseling and research and documentation.

A bad credit repair agency is in the business of getting vulnerable people to trust them so they can charge them large amounts of money and do next to nothing. Or even make your credit and reputation even worse than before you contacted them. Be safe and know what to look for before you sign up for help at any credit repair agency.