Best Credit Repair Companies

Jose Moreno

Professor, finance, University of the Incarnate Word

If you are looking to buy a home or car or take out a personal loan, you must be concerned about your credit score. Although there are different companies monitoring credit scores, they don’t use the same weights to factor all variables included in these scores. The common factors that lower credit scores are missing payments, applying for credit frequently, and, of course, getting close to your credit limit.

However, the one mistake that I consider the most common (and that could be easily fixed) is forgetting to monitor your credit reports. Nowadays, it is easy and inexpensive to monitor your credit scores by using an app or a website that can notify you if something changes in your credit reports.

By creating a habit of checking your credit at least once a month, you can avoid significant damage to your credit that an erroneous credit transaction or an identity theft attempt can cause.

J. Michael Collins

Professor, finance, University of Wisconsin - Madison

The most common mistake is failing to pay attention. Credit scores are based on all the records that we have that are reported to credit bureaus, including when we apply for a loan, and then if a loan is approved, how much we borrow and if we pay back any loans on time. But even non-loans could be reported, like a very past-due bill or owing back taxes. So the No. 1 rule is pay attention to any bill or loan payment due, and make the payment by the deadline. If you really cannot come up with the funds, contact the creditor and see if you can get extra time. Sometimes a partial payment is better than none. Another mistake is to jump on any offer to take out credit. Just because a store will offer you a discount to open a new credit card does not mean you should take on a new loan in the form of a credit card. Be mindful about seeking out credit in any form.

Kevin McEvoy

Emeritus faculty, marketing, University of Connecticut

While credit scores can be repaired or increased over time, borrowers still need to be aware of all these factors to avoid making mistakes that will negatively affect credit scores in the first place. These are some of the most common mistakes:

• Frequently not paying lenders on time or the full amount owed. This is one of the biggest red flags.
• Not explaining a situation or requesting an extension in times of borrower financial distress. This can suggest a lack of understanding, interest, or ability to explain and attempt to resolve any issues.
• Carrying too much interest expense created by not paying the full amount owed and therefore carrying over a piece of the debt into the next payment period.
• Borrowing from too many lenders. This can suggest that the borrower has a lower level of approved credit and is therefore blocked from obtaining an increase in credit limit by an imposed credit ceiling, so the borrower goes to multiple credit sources.

Ellen Kraft

Associate professor, business analytics, Stockton University

Consumers can make mistakes that negatively affect their credit score in many ways, including:

• Forgetting to pay bills: Ignoring email notifications or misplacing mailed bills can lead to missed payments despite having the money.
• Making payments over 30 days late: A single late payment can drop a score by up to 100 points and stays on a report for seven years.
• Not monitoring credit: Consumers should check their credit report regularly to catch identity theft or missed payments before major damage occurs.
• Too many hard credit inquiries: Multiple inquiries can lower a score; auto and mortgage inquiries within 14–45 days usually count as one.
• Overutilizing credit: Using over 30% of available credit can lower a score; 10% is ideal.
• Having an account sent to collections: A collection account significantly lowers a score.

J. Michael Collins

Professor, finance, University of Wisconsin - Madison

The key factors are paying bills on time and reducing the ratio of debt to income or debt borrowed to available credit (e.g., on a credit card). The exact strategy depends on where you are in your credit life span. Opening new lines of credit or credit cards are not usually a good way to improve credit scores unless you don't have much credit history. If you are just starting out, look into a secured credit card or even a joint credit application with a parent or relative who has better credit. If you have bad credit, the best strategy is to diligently pay off what you owe and not open or take out new debt.

Kevin McEvoy

Emeritus faculty, marketing, University of Connecticut

A low credit score need not be disastrous. Lenders make money by lending, and so they want to offer credit but need to be paid back as well. Improving one’s credit score means improving one or more of the issues noted below:

• First, consolidate debt as much as possible. This gives the borrower a little leverage in asking for a payment plan. Then drop the newly empty credit accounts.
• Start paying on time, even at a reduced amount. This suggests a good faith effort to repay the amount even if it takes time.
• Explain your situation to lenders and ask for a payment plan.
• Ask for a reduction in interest charges. Lenders would rather get something than nothing.
• Institute a moratorium on new borrowing unless for a legitimate emergency.
• Be honest with yourself and your lenders. Good faith goes a long way when dealing with lenders.

Annamaria Lusardi

Professor, finance, Stanford University

One of my recommendations for improving your credit score and keeping it high is to pay credit cards on time and pay off any credit card balance as much as possible. Payment history accounts for 35% of the score, so pay on time and pay off any balance starting with the credit card with the highest interest rate. Your personal finance will very much benefit from it.

Patrick Augustin

Associate professor, finance, McGill University

Make debt payments on time (auto loans, mortgage loans) and keep credit card records in good standing (regularly pay down all your credit card debt when it is due, not partially, don’t ramp up too much credit card debt relative to disposable income, etc.). Make regular payments for bills.

Andrew Schwartz

Assistant professor, finance, Elon University

When shopping for a credit repair service, you should look for one that is realistic about what they can do. If it seems like they are making promises that sound too good to be true, they probably are. Similarly, come into the process with realistic expectations. Payment history and credit utilization have by far the biggest impact on your credit score. A credit repair service can’t make payments for you or force you to stop using too much of your credit limit. In the end, the best way to improve your credit score is to do the boring work of practicing good financial habits.

Dorothy Kelly

Professor, finance, University of Virginia

As the saying goes, “An ounce of prevention is worth a pound of cure.” In other words, it is much easier to prevent a bad thing from happening in the first place than to repair the damage after it has happened. This truth applies to most things, including one’s credit history. If you damage your credit by making late payments or failing to make a payment, it will take much more time to repair the damage to your credit than it took to damage it. A late or missed payment will stay on your credit report for seven years.

Irene Hurst

Director, analytics & creativity, University of South Florida

Stop overspending. Develop a budget and stick to it within your means. Another important point is being mindful of small, frequent expenses. If you spend just $1-$2 per day on “small stuff,” that adds up to $30 per month, or $360 per year. When you consider that a cup of coffee costs $3-$8, those little purchases could end up totaling over $1,000 a year.