What is credit restoration and is it ever legitimate?

Two women in discussion

The following is presented for informational purposes only and is not intended as credit repair.

If you’re struggling to improve a low credit score, credit restoration can sound like a great option. But what is it and does it really work? Let’s take a look.

What is it?

First, let’s look at what credit restoration is so you can understand if you need it. Credit restoration is a way to “repair” or delete some of your bad credit history to improve your overall credit score. This is done by disputing the information on your credit report. Through the Fair Credit Reporting Act (FCRA), you have the legal right to dispute any information on your report. Then, the credit reporting agencies and your creditors have 30 days to investigate and either verify it as correct or remove the disputed marks until they can be verified.

Does it work?

Well, yes and no.

If you have erroneous information on your credit report, then a credit restoration company may be able to help you remove it. And of course, if the erroneous information is causing your score to drop, then this would be a good thing.

But what if your credit report is correct and there are no errors? Then, depending on the company, they may go ahead and dispute the negative marks on your credit report anyway. And if the reporting agency isn’t able to verify the marks within 30 days, those marks will be removed – at least temporarily. Eventually, the reporting agency is going to complete the review, at which point the negative marks will be added back to your report.

Is it legitimate?

Companies that offer to help you remove incorrect information from your credit report are legitimate. Companies that promise to increase your credit score by falsely disputing valid marks on your report are not.

Credit restoration services, therefore, are legal, and if you’re not sure how to go about correcting the errors on your credit report, you may be tempted to hire a credit restoration company. The trouble with credit restoration services – even the legitimate ones – is that the services are usually expensive and almost always something you can do on your own. You’ll need to weigh the time, effort, and cost involved before deciding which course makes the most sense for you.

It bears repeating, however, that knowingly disputing accurate credit report information is a bad idea. If your credit is hurting right now, focus on making smart decisions that help you rebuild your credit over time. Past mistakes will impact your credit score less and less as time goes by, while most negative marks will disappear completely in seven years.

If you’re unsure whether or not the information on your credit report is accurate, MMI offers one-on-one credit report review sessions. This can be a helpful way to learn more about your credit, including what factors go into your score and what changes you can make to help build that score over time.

Tagged in Build your credit score, Financial scams, Understanding your credit report

Emilie writes about overcoming debt, while balancing trying to eat healthy, stay fit, and have a little fun along the way. You can find more of her work at BurkeDoes.com.