Credit Repair
CreditGlossary term
Definition
The process of improving a damaged credit score by addressing negative items on your credit report, such as disputing errors, negotiating with creditors, and establishing positive credit habits. While you can do credit repair yourself for free, there are also companies that offer these services for a fee. The Credit Repair Organizations Act requires credit repair companies to be transparent about their services and prohibits them from charging upfront fees.
Related terms
- Credit DisputeA formal process in which you challenge inaccurate or incomplete information on your credit report by filing a claim with the credit bureau or the creditor that reported it. Under the FCRA, the credit bureau must investigate your dispute, usually within 30 days, and correct or remove any information that cannot be verified. You can dispute errors online, by phone, or by mail with each of the three major credit bureaus.
- Credit CounselingA service provided by certified professionals who help you manage debt, create a budget, and develop a plan to improve your financial situation. Nonprofit credit counseling agencies can negotiate with creditors on your behalf to lower interest rates or set up a debt management plan. Reputable agencies are accredited by the National Foundation for Credit Counseling or the Financial Counseling Association of America.
- Goodwill LetterA written request sent to a creditor asking them to remove a negative item, such as a late payment, from your credit report as a gesture of goodwill. This approach works best when you have a strong history with the creditor and the negative item was an isolated incident caused by circumstances beyond your control. There is no guarantee a creditor will honor the request, but many people have had success with polite, well-written goodwill letters.
- Credit ReportA detailed record of your credit history maintained by credit bureaus, including your accounts, payment history, balances, and any public records like bankruptcies. Lenders, landlords, and sometimes employers review your credit report to assess your financial reliability. You are entitled to one free credit report per year from each of the three major bureaus through AnnualCreditReport.com.
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