Is Credit Repair Legal?


For millions of Americans with poor credit, the idea of fixing their credit sounds almost too good to be true. But, you may wonder, “Is credit repair legal?” when you see credit repair companies advertising online or locally.

legal credit repair

And it’s no wonder, with so many scam artists out there, it can seem as though credit repair is nothing more than wishful thinking.

Fortunately, that’s not the case. Credit repair is perfectly legal, and more than that, it is your right and responsibility as a U.S. consumer. Regardless of your income, amount of credit card debt, or other financial issues, everyone is legally entitled to a fair, accurate representation of the information that appears on their credit report.

Credit repair is the process of rebuilding your credit after it’s been damaged by poor credit habits, financial setbacks, credit reporting errors, or identity theft.

We’ll show you exactly what makes credit repair legal, how to sidestep any murky territory, and how you can get started fixing your credit today.

Fair Credit Reporting Act (FCRA)

The FCRA is a piece of federal legislation enacted in 1970 that outlines several rules regarding how your credit file is handled.

First, it allows you access to your credit report at any time for a reasonable price, including at least one free copy from each credit bureau every 12 months. Below you’ll find more situations in which you might qualify for a free credit report from Equifax, Experian, and TransUnion.

The FCRA also limits who may access your credit history. They must have “permissible purpose” so that your credit report isn’t cluttered with multiple inquiries pulling down your credit score.

If you find any credit inquiry listed on your report that you did not explicitly authorize, it is your right to have it removed under federal law. Otherwise, each inquiry could shave off a few points from your credit score while also raising a potential red flag to future creditors.

The FCRA also limits the length of time any piece of negative information can stay on your credit history. Most items automatically drop off after seven years, although some more severe infractions stay on as long as ten years.

Ready to Raise Your Credit Score?

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Credit Report Disputes

If you see something listed that the credit bureaus should have already removed due to the time frame, it’s worthy of being disputed. The FCRA gives you the right to dispute any items on your credit reports. You can dispute any item that you believe to be inaccurate, untimely, misleading, biased, incomplete, or unverifiable (“questionable”).

In essence, you are entitled to dispute the questionable negative items on your credit reports that may be giving lenders an unfair impression of your creditworthiness.

The credit bureau is required to open and complete an investigation within 30 days of filing the dispute. They must also update you on any action that did or did not take place on your credit report as a result of that investigation.

As long as you follow the correct steps during the dispute process, there’s no reason why you can’t improve your credit score to become an accurate reflection of your financial history.

The Right to Access Your Credit Report for Free

The first step to analyzing your credit is to see what is actually on your report. Fortunately, it’s easily accessible.

  • You are entitled to get a free credit report from each of the three major credit bureaus at least once every 12 months.
  • You may be entitled to more than one free credit report every 12 months, depending upon the state you live in.

Other Ways to Get a Free Copy of Your Credit Report

You can also receive a copy of your report for free if you’ve been denied any of the following:

  • Credit: This means any type of credit, whether it is a credit card, loan, or some other type of financial instrument.
  • Insurance: This includes homeowner’s insurance, renters insurance, car insurance, or health insurance.
  • Employment: If a potential employer pulls your credit report and decides not to hire you based on what is found, you are entitled to a copy of your report.

You can also receive a free copy of your credit report if:

  • You’re unemployed and plan to seek employment: If you are planning to look for work within the next 60 days.
  • You’re on welfare: No other requirements here, if you are on welfare, you qualify for an additional free report.
  • You’ve been a victim of identity theft: As long as you file a report with the police to alert them of the fraud.

While you can often get your credit report for free, you may have to pay a fee to see your credit scores.

The Right to Dispute Items on Your Credit Reports

Credit repair happens by removing negative marks from your credit report. By law, every piece of financial information listed must be accurate. Otherwise, you can file a dispute to have it removed. This law is enforced by the Federal Trade Commission (FTC).

If you’ve already tried reaching out to the three major credit bureaus and still have an issue, you can submit a complaint to the Consumer Financial Protection Bureau. The CFPB will forward your complaint to the company and work to get you a response, generally within 15 days.

The premise of legal credit repair is to find inaccuracies on negative accounts on your credit report. Even if just one element of the listing is incorrect, such as the date a payment was reported late or the outstanding balance of a loan, you can file a dispute. The more supporting documentation you have available, the greater the chance of success you have for getting those items removed.

What types of items might be damaging your credit score? The most likely culprits include late payments, charge-offs, collections, foreclosures, repossessions, and bankruptcies.

Depending on how severe the items are and how many you have, you may prefer to tackle credit repair on your own or hire a professional to help you repair your credit.

Do-It-Yourself Credit Repair vs. Hiring a Credit Repair Company

Once you have your credit report, it’s time to figure out the best way to start disputing any negative information on it. With a bit of research, you may be able to identify the kinds of information that can be removed. This is especially true if you only have one or two straightforward negative items. Otherwise, you can reach out to a professional credit repair company.

Most legitimate credit repair companies offer a free consultation where they’ll review your financial history and develop a strategy moving forward. They can help you understand the next steps and what you can do to dispute the errors effectively.

If you decide to move forward and hire a credit repair company, you’ll get advice on your legal rights and on handling any creditors and collection agencies. Credit repair companies also give you personalized advice on how to handle debt that may be affected by a statute of limitations.

When you repair credit by yourself, you could run the risk of reopening a collection by making a wrong move. A professional credit repair company will help you deal with these tricky areas. The best firms have experienced attorneys and paralegals on staff to assist you throughout the entire credit repair process.

Credit Repair Can Be Difficult

Credit repair is legal, and it’s protected by federal law. It can also be free if you do it yourself. Of course, you should factor in the time it takes you to do all the research and write all the letters as time is money. However, many people get confused or intimidated when it comes to exercising their rights.

One of the main reasons credit repair can be complicated, even though it is perfectly legal, is that the credit bureaus and creditors may not uphold the spirit of the law. Credit bureaus and creditors are required to investigate your disputes unless they decide it is a frivolous dispute.

Contrary to popular belief, consumer credit bureaus are not federal agencies. Instead, they are private, for-profit companies. That means it’s essential to monitor how they handle your credit reports and relevant disputes.

Their core business isn’t consumer protection; it’s selling your financial information to interested parties like lenders and credit card companies.

Credit Repair Organizations Act (CROA)

The Credit Repair Organizations Act (CROA) is a federal law passed in 1996. It requires credit repair services to advertise and communicate honestly with consumers.

While ethical credit repair is perfectly legal, there are some credit repair scams that you should be aware of. One of them is attempting to “segregate” your credit files. And it’s something that only a disreputable credit repair organization will ever try to do for you.

Recognizing a Credit Repair Scam

You cannot legally start over with a “new” credit file. Some credit repair companies claim that they can create a new credit file. They will tell you to apply for an Employer Identification Number (EIN) or a Credit Privacy Number (CPN).


An EIN can only legally be used by a business entity. Attempting to use one for your personal credit is illegal and constitutes fraud. So, even if you were only following the advice of a credit repair company, you would be the one held liable.

Never do business with a company providing this service. It’s better to avoid the possibility of fraud. Only hire a credit company with a positive reputation so you can legitimately and legally repair your credit.


Another method used by unscrupulous credit repair companies is what’s known as “jamming.”

They send countless letters disputing everything on your credit report in the hopes that the credit bureaus will not verify every piece of information during the mandatory 30-day investigation period. This practice is unethical and ineffective in the long run.

While you might see a temporary increase in your credit score when an unverified item drops off, chances are that the creditor will report the same information during the next period.

At that time, the negative item will reappear on your credit report, and your credit score will drop back down to where it was initially. The lesson here? Ask your credit repair company what specific tactics they’ll employ to fix your credit.

Paying Upfront

A final red flag to look out for during the credit repair process? Working with a credit repair company that requires advance payment before they do anything for you. This likely means that they don’t intend to perform any credit repair services at all and could take your money and run.

However, it’s important to note that these shady businesses are not the norm, nor are they wholly representative of the entire credit repair industry. Do some basic research before choosing a credit repair company. Then, you can be sure you’re working with a company that knows how to use federal and state credit repair laws to your advantage.

Bottom Line

Once you’ve taken the time to explore your legal rights, you’ll see that not only is credit repair legal, but it’s an essential way to take back control of your finances. Familiarize yourself with the Fair Credit Reporting Act and other consumer laws so that you can fully exercise your rights.

By ensuring that only accurate and timely information remains on your credit report, you give yourself the best chance to qualify for the credit terms you deserve. Otherwise, you might be unfairly suffering from bad credit that you don’t deserve.

Don’t wait to get started with credit repair. The sooner you begin, the better your credit scores will be in both the short term and the long term. Whether you decide to repair your credit on your own or work with a professional credit repair company, the most important thing is to take action now.

Ready to Repair Your Credit?

Learn how to get help disputing errors on your credit report that could be hurting your credit score.

Lauren Ward
Meet the author

Lauren is a personal finance writer who strives to equip readers with the knowledge to achieve their financial objectives. She has over a decade of experience and a Bachelor's degree in Japanese from Georgetown University.