Credit repair can be a very spammy business, so much so that the government has gone to great lengths to regulate the services as much as possible. Even though there are rules that credit repair services must abide by, it doesn't mean that all of them do. So when can you trust your credit repair service? Here are some guidelines to follow:
This is a big red flag. Credit reports and the credit bureaus can be fickle. In addition, everyone's credit report is different. If your credit report is free of errors and doesn't have much wiggle room for negotiation with lenders, it may be extremely difficult to raise your credit score. If they guarantee they can raise your credit score without even looking at your credit report, it is a good sign that they may just be after your money.
On the other hand, if they offer you a money-back guarantee, take advantage of it. Just make sure you read the fine print. Many companies have specific wording around circumstances that would qualify a refund. The good news: Sky Blue Credit Repair actually offers a full refund for any reason if you are not satisfied within the first 90 days.
Credit repair services are experts (for the most part) on how to handle credit report situations, so letting them advise you on the areas to focus on can be a good idea. However, if a credit repair service is pressuring you to focus on a certain area of your credit report to fix, especially an area you don't want them to focus on, or is not letting you give any input into what they should be doing, they may be trying to prolong the process, which will cost you more money in the end. Pick a service that is going to let you choose the best plan of action for fixing your credit.
The Credit Repair Organizations Act (CROA), which is monitored by the Federal Trade Commission, doesn't allow credit repair services to ask for money unless they have completed services that were already agreed on. Some credit repair services ask for an initial fee, which is legal, but if they ask for payment for services up front before completing any work, that is a big red flag.
The CROA also specifies that credit repair services must offer certain cancellation rights, which means you should be able to cancel the services within a certain amount of time. Most of the top credit repair services are month-to-month, so you can even cancel after your first month if you are not satisfied.
As an added bonus, a few credit repair services offer a guarantee, not that they'll raise your credit score, but that they will complete the work that you agreed upon. Sky Blue Credit Repair actually offers a guarantee if you were not pleased with their service in any way, which is unusual for a credit repair service.
By law, all credit repair services must present all contracts in writing. Get everything in writing. Everything. If the service promises things, like raising your credit score or removing a specific item from your credit report, but does not include those promises in your contract, you should think twice before using that service. In general, you should never trust a service that does not include a contract in writing.
Credit repair services are not allowed to pull your credit report for you. Some credit repair services have deals with certain credit bureaus, like Experian, so they have access to your Experian credit report without having to pull it. However, any credit repair service that pulls your three-bureau credit report for you is probably not playing by the FTC rules.
Credit repair services usually charge by the month, so the longer it takes them to fix your credit, the more they get paid. Stay on top of the credit repair service and make sure they aren't delaying things on purpose. If they are disputing a negative item on your report, it is law that the credit bureaus can only take 30 days to make a decision, so if it's been over a month, you should contact your credit repair service and ask about the progress.
Not sure which credit repair services to trust? Here is a good comparison of the two top credit repair services, Sky Blue Credit Repair and Lexington Law, as well as a list of the top credit repair services with details about each.
