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Credit Repair Companies.. Do they work?

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Anonymous
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Credit Repair Companies.. Do they work?

Hi. I signed up for Lexington Law credit repair in mid August and am on their $99.95 a month plan. So far they claim to have removed 12 negative items from off of my reports. According to credit karma it seems like my credit has went up just a bit but I am wondering if I am actually wasting my money each month. Has anyone used a credit repair company and had good results? If so, how long did it take? I have heard people say I can do what they are doing myself but I don't know where to start. Any suggestions appreciated. According to credit karma my transunion is 550 and my equifax is 577. I have to wait till morning to call customer service to get my fico because I answered the security questions wrong Smiley Sad I am a divorced single mom of three grown kids and I have a toddler. I really want to buy a home for my toddler to grow up in and I would like to pay it off before I am too old. I am turning 40 in 13 days! I just want a home loan but feel hopeless because as of now I cannot even get a department store credit card ugh

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5 REPLIES 5
Anonymous
Not applicable

Re: Credit Repair Companies.. Do they work?

Your answer will depend on what type of negatives your are removing, their age, the amount, which creditors, and what is currently on your credit report? Broadly speaking there is nothing a credit repair company can do that you cannot do for yourself. Most credit repair companies work by disputing say 2-3 negatives a month (given you have 12) by sending letters to the credit bureaus and the original creditors by questioning the legitimacy of the negative, misinformation about your name, ask for verification of debt, etc. In some cases this will work because the creditor does not respond, lacks the information, or simply doesn't care. In some cases it's temporarily removed only to return later when a creditor responds or validates. In some cases the creditor responds quickly and no action occurs. What makes most credit repairs somewhat effective is that they are a nuisance in that they will repeatedly send letters and by doing so will get some items deleted. To answer your real question you can do these letters yourself but you have to be dedicated and continue to send but you must time the letters and which of the 12 you address.This is an art because if you over dispute you risk having nothing removed. If you do it yourself than you must be viligent when you don't get the result you want. There are free resources you can find to help you do this. Most people use a credit repair company simply because they don't want to be bothered by the process or they are misinformed. It's only a "waste of time" if you have the time and endurance to do it yourself.

 

I personally used a credit repair company 1 month and then started working on it myself when they made many of the letters they sent available to me. I laughed and thought why am I paying you a $100  "setup" fee plus $79/ month (I used a different company then Lexington) to do something that is not complicated.

Message 2 of 6
Anonymous
Not applicable

Re: Credit Repair Companies.. Do they work?

To the person that replied above, the OP said that she had 12 negative items removed so far, not that she had 12 negative items on her reports.  I would imagine that the amount of negatives is quite a bit higher than what's been removed thus far. 

 

$100/mo is a lot to spend on this service IMO, unless you either are very comfortable handing over that monthly fee or you can't afford a few hours per week to work on it yourself.  With a toddler I can understand if that's that case, but really all you have to do is write letters.  It actually gets easier over time since you already have the letters typed up and you are just reprinting another copy the next month and sending it off. 

 

First thing, I would look at your credit reports (using Credit Karma is fine) and identify exactly how many negative items you have on there and some information about each such as the name of the creditor, how old the negative is, the severity of it (collection with amount, 30 day late, 90 day late, etc) and so on.  You need to know what you're starting with.  LL could be telling you BS that they "removed 12 negative items" if you aren't verifying that for yourself by monitoring your own reports.  Start a list and keep track of how many negatives there are and then month to month update it and see what's coming off and what isn't.  Based on the effectiveness off LL you can determine if it's worth that $100/mo for them to continue doing what they are doing.

 

Credit Karma is great for tracking your credit reports, but it is terrible for following your scores.  I strongly advise against looking at those scores as they are Vantagescore 3.0 scores, not FICO scores which are used far more often.

 

If you go to creditchecktotal.com you can sign up for a free trial membership for $1.00.  Cancel it using the automated phone system any time in the next 7 days.  For that $1.00 you'll get all 3 (Experian, TransUnion, Equifax) of your FICO 08 scores.  A month later for a $1.00 you can do this again.  Write down your scores and track their progression from month to month.

 

I'm sure this goes without saying, but I'll say it anyway:  Outside of the credit repair work you (or LL) is doing, it's even more important that you're currently making the right credit decisions.  On time payments, keeping utilization low and/or paying down any balances that you have, not applying for new credit, etc.  The more recent the data, the more it impacts your scores; if you have a late payment this month it will damage your scores far more than if LL removes 3 or 4 more negatives from a few years back.  Just make sure you aren't taking one step forward only to take 2-3 steps back. 

 

You're going to want your FICO scores to be at least 700 or so before you apply for a mortgage.  That can be accomplished in a year or so of time with some work on your old negatives as well as healthy credit behavior for the following year.  740+ scores will yield you the best interest rates, high 600's to low 700's will get you decent ones but probably not the best.  Below that, there's a chance you may not get approved and even if you did your monthly payment would be several hundred dollars more per month just because of the unfavorable interest rate you get. 

Message 3 of 6
rmduhon
Valued Contributor

Re: Credit Repair Companies.. Do they work?

A friend used LL for a while and he said that the items that were removed came back a couple of months later. So keep an eye out for that happening
Message 4 of 6
cjane1
Frequent Contributor

Re: Credit Repair Companies.. Do they work?

They do exactly the same steps that is suggested on here, the only difference is you do all the work instead of paying someone else to do it.

Message 5 of 6
silkysean
Regular Contributor

Re: Credit Repair Companies.. Do they work?

Simply answer is they don't.Most people who have the items removed is because it's due to fall off anyway or only if incorrect.If it's correct they can dispute all they want and removing is temporary trust me it will come back sooner or Later.My view is google and this site is wonderful.I messed up my credit so it was now my responsibility to stop with the excuses and roll my Sleeves up and research and find out how and what to do.There is so much info and knowledge available on this site especially the rebuilding forum.Read and study first and then ask questions and it will come to you naturally that it's easier than a lot of people think and doesn't require as much time as we think.Yes it takes time but Please remember it will not be a quick or overnight success.Be patient with yourself and open to learning and you can accomplish your Goals.Its one small step at a time !

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