Are credit repair services worthwhile?

We've all seen the advertisements: "Eliminate your bad credit!" "Increase your credit score by 150 points in 30 days!" "We can remove bankruptcies, judgments, liens and bad loans from your credit file forever!"

The truth is that, like fad diets, no credit repair agency can wave a magic wand and take away all of the blemishes on your credit history. No one can legally remove accurate and timely negative information from a credit report. But ethical credit repair services, including reputable debt counselors, can put you on the road to credit recovery by helping you develop a plan to reduce your debt and acting as your advocate to correct inaccuracies on your credit report.

An ethical credit repair service can save you time. While do-it-yourself credit repair is, by law, free, it can take a lot of time. Correcting an item may take hours between applying for your credit reports, reviewing and highlighting errors, documenting the item, preparing your letter and mailing it. An ethical credit repair service can take care of this onerous legwork for you, for a fee. Be very careful to get the fees in writing and to review them carefully to be sure you are paying reasonably for the help you actually get. Sadly, there are many credit repair services that will make the promises, take your money, and do little to really help you. For more information on finding an ethical credit repair service, please see How do I choose an ethical credit repair service?

You should also know that anything a credit repair clinic can do for you legally, you can do for yourself at no cost if you take the time to learn some simple processes and have the patience to keep working the problem directly.

According to the Fair Credit Reporting Act (FCRA), you are entitled to dispute inaccurate or outdated items on your history report without charge. Under the FCRA, both the credit bureau and the information providers (i.e. the person, company or organization that is providing the information regarding the item) are reponsible for correcting inaccurate or incomplete information in your report. For more information on disputing inaccurate items on your credit report, please see How do I improve my credit; how long does it take?