Credit Repair Cost
How much does credit repair cost? That’s not an easy question to answer but we’ll do our best with this article, which will also give you an overview of what credit repair is and why you might need it. So, read on to learn what factors into credit repair and whether it’s something worth considering paying for, or if you’ll be better off leaving your credit score as is.
Importance of Credit Repair
In the US, the three main credit bureaus—Experian, Equifax, and TransUnion—come out with your credit reports using credit-related information from multiple sources. This information can sometimes be incorrect or not up-to-date, negatively affecting your credit score. Thankfully, US consumers can contest items in their credit reports through what is known as credit repair. While this is not free, the benefits can be well worth the credit repair cost. For instance, if your credit report mentions a late interest payment that you know you had made on time, you can challenge it. The bureau will have to investigate and if you’re right, that negative information will be struck from your report, improving your credit score and potentially saving you thousands of dollars in the future.
Ways to Handle Credit Repair
Generally speaking, there are three ways to repair your credit:
- Do-it-yourself credit repair
- Credit repair software
- Professional credit repair services
These methods differ in the amount of effort you have to put in. Then, the average cost of credit repair associated with each of these methods also varies substantially. Let’s look at each of these and the related credit repair prices.
DIY Credit Repair Cost
Yes, you can manage your credit repair yourself. Credit repair takes time and effort, but you may not need to hire anyone else to get it done if you have the patience. All US consumers are entitled to a free annual copy of their credit report from each bureau. You will have to review these reports properly to identify any disputable items.
If anything looks suspicious, there are two main ways to proceed with contesting them. The first involves almost zero credit repair cost. Each credit bureau has an online dispute portal where you can fill up the details to submit your case for free. There might be additional documents required later. The other way is to submit your dispute by mail. Some experts say that your chances of items being removed are better this way. There are sample dispute letters available online to help you. You will have to send your letters via registered mail, with a return receipt. If you are mailing to all three bureaus, based on charges at the time of writing, the total cost of credit repair for this method will be a little over $20.
Credit Repair Software
There are a variety of applications available today to help you manage the credit repair process, with prices ranging from about $20/month to $600 as a one-time payment. The more features the software offers, the more expensive it is likely to be.
The most affordable ones will provide a few sample dispute letters and include instructions on how to go about contesting negative items on your credit reports. These options are great if you are looking for low-cost credit repair with some guidance.
At the other end of the spectrum, you’ll get applications that have more dispute letters to cater to different situations, alerts for the progress on your disputes, credit score tracking, and more. You may even be assigned a credit expert to guide you through your specific process in some cases.
This is where you hire a credit repair expert to manage the credit repair process on your behalf. This naturally means a higher credit repair services cost. However, not only does it save you time and effort, but it can also mean a faster process, not in the least because of the expert’s experience. In fact, credit repair statistics show that 48% of consumers see a credit score increase of a hundred points or higher on using credit repair services for six months or longer.
What Do Professional Credit Repair Services Do?
First, they pull up your credit reports based on your authorization and review them to identify disputable issues. Many credit repair companies offer a free consultation, so at this stage, the cost of credit repair services will be zero.
If you decide to hire a company, the credit repair fees can vary depending on the range of services. These typically include:
- Submitting dispute letters on your behalf;
- Managing the dispute process with bureaus, creditors, and debt collection agencies;
- Providing you with credit score updates;
- Monitoring your credit reports;
- Referring you to lenders that offer better rates or take over existing debts;
- Coaching you on credit management and building your credit score;
- Providing services related to identity theft.
There’s usually a one-time or setup fee at the beginning, ranging between $10 and $100. Then, there’s a monthly fee, ranging from $30 to $200 for the period the company works for you. These fees include the credit repair attorney cost if the firm has in-house lawyers registered in your state. Several companies also work on a success fee, charging you only if they get items removed from your report. The cost per removed item can go as high as $500 in some cases but usually stands at around $200.
Note that federal and state laws govern the functioning of credit repair companies. Before you enter into a contract with a service provider, we highly recommend going through the laws applicable in your location.
How Much Should You Pay for Credit Repair?
We cannot quite specify the average cost of credit repair services since the amount you will end up paying depends primarily on the method you select. Here are a few pointers that can guide your selection process.
- Decide if you need credit repair. You are in the best position to judge this, as you understand the validity of negative items mentioned in your credit reports. If you need expert advice, you can opt for a free consultation with a reputed credit repair company to understand if the items on your report are worth contesting. Remember that a consultation does not oblige you to hire the company, so this can be done without incurring any credit repair cost.
- Figure out if you have the time required to manage the correspondence with different agencies. Apart from the time, the paperwork involved can also overwhelm people handling credit repair independently for the first time. If you don’t mind paying an expert for some convenience, hiring a credit repair company is an excellent option for you. Hiring an expert is also useful if you plan to apply for a loan or similar facility soon, requiring quicker resolution of credit report items so that you can get a better deal.
- To ensure that the cost of credit repair isn’t unnecessarily high, try to understand the range of services you require. The potential service provider may have a vast service catalog but this doesn’t mean you need everything on it. So, double-check that before hiring a company so that you don’t end up paying unnecessarily high credit repair prices.
The Bottom Line
So, how much does credit repair cost? We are in a better position to answer this question now. As seen above, what you pay can range from almost nothing to a couple of hundred dollars every month, depending on the method you use. Whatever means and cost structure you ultimately go for, remember to do your background research to guarantee the biggest bang for your buck.