Companies that promise to fix a poor credit history are a familiar sight in the United States, and the Federal Trade Commission (FTC) says many of them are scams. This guide summarises the FTC’s consumer advice on what credit repair companies may lawfully do, how to recognise a scam and what free options exist. It covers the United States only; credit reporting rules in the UK are different. It is general information, not legal or financial advice.
What no company can legally remove
The FTC’s central point is that no one promising to repair credit can legally remove information that is both accurate and current. Its guidance says that most negative information stays on a credit report for seven years and bankruptcy information for 10 years, and that negative information falls away over time. It also notes that in some cases, such as when a person is being considered for a job paying more than $75,000 a year or seeking a loan or insurance valued at more than $150,000, a credit bureau may include older negative information that would not otherwise show up.
What credit repair companies are required to do
The FTC says it is illegal for credit repair companies to lie about what they can do, or to charge before they help. It also says they must explain a person’s legal rights in a written contract that sets out the following:
- the services the company will perform;
- a three-day right to cancel without any charge, with a written cancellation form;
- how long it will take to get results;
- the total cost; and
- any results the company guarantees.
The FTC’s advice is blunt about value: anything a credit repair company can do legally, a person can do for little or no cost, and the best way to improve credit is to show over time that debts are paid on time.
Six signs of a credit repair scam
The FTC lists behaviour that marks a scam. The scammer:
- insists on payment before helping;
- tells the person not to contact the credit bureaus directly;
- says to dispute information the person knows is accurate;
- says to lie on applications for credit or a loan;
- says to file a false identity theft report; or
- does not explain the person’s legal rights when describing what they can do.
The FTC says these are not just bad ideas but part of the scam, and that they can hurt a person’s credit. It adds that a company promising to create a new credit identity or to hide bad credit history or bankruptcy is also running a scam. Such companies, the FTC says, often use stolen Social Security numbers or get people to apply for Employer Identification Numbers from the IRS under false pretenses, in order to create new credit reports. A person who applies for credit using a number other than their own will not get it, and the FTC warns they could face fines or prison.
Checking a credit report for free
The FTC says the three nationwide credit bureaus, Equifax, Experian and TransUnion, have permanently extended a programme allowing everyone in the US to check their report from each once a week for free at AnnualCreditReport.com. Separately, it says that through 2026 everyone in the US can get six free Equifax reports per year by visiting the Equifax website or calling 1-866-349-5191, in addition to the reports available at AnnualCreditReport.com. A further free report is available if a person is unemployed and planning to look for work within 60 days, is on public assistance, or has an inaccurate report because of fraud including identity theft. After an adverse action such as being refused credit or a job because of something in a credit report, a person is entitled to another free report if they ask within 60 days of being notified.
Disputing mistakes without paying anyone
Disputing mistakes or outdated items on a credit report is free, according to the FTC. Both the credit bureau and the business that supplied the information are responsible for correcting inaccurate or incomplete information. The FTC advises writing to both, and it provides sample letters. If possible, it suggests waiting until the mistake is removed and the report is accurate before applying for a large loan, insurance or a job.
If a person is in debt and needs help
The FTC says a reputable credit counselling organisation might help. Good counsellors discuss the person’s whole financial situation before proposing a personalised plan, do not promise to fix every problem and do not ask for a lot of money before doing anything. It points to non-profit programmes offered through credit unions, universities, military personal financial managers and Cooperative Extension Service branches.
If a payment has been made
Scammers often ask for payment by cryptocurrency, wire transfer or a gift card number, which makes it hard to recover money. The FTC says that the sooner a person acts, the better, no matter how they paid, and that problems with a credit repair company can be reported to the FTC at ReportFraud.ftc.gov, the state attorney general or the state consumer protection office. The FTC’s identity theft site, IdentityTheft.gov, gives a recovery plan if someone else may be using a person’s personal information.
Frequently asked questions
Can a company remove accurate negative items?
No. The FTC says credit repair companies cannot legally remove negative information that is accurate and current, and that it will go away with time.
Is it legal for a credit repair company to take payment up front?
The FTC says it is illegal for credit repair companies to charge before they help you.
The bottom line
According to the FTC, the free route is to check reports, dispute errors, pay bills on time and reduce debt, while any company demanding money first, telling the customer to dispute accurate items or lie on applications, or offering a new credit identity is a scam. Reports of credit repair scams can be made to the FTC.