How much does it cost to clean up your credit?

Having bad credit can negatively impact many aspects of your life, from getting approved for loans and credit cards to qualifying for an apartment or even a job. The good news is that there are steps you can take to improve your credit score and “clean up” your credit report. But how much does it actually cost to do this? Here’s an overview of some of the main costs associated with credit repair.

Credit monitoring services

One of the first things you should do when trying to improve your credit is monitor your credit reports and scores regularly. This allows you to catch any errors or suspicious activity early and dispute them with the credit bureaus. There are a few options for monitoring your credit:

  • Get your free credit reports – Federal law allows you to obtain a free copy of your credit report from each of the three major credit bureaus (Experian, Equifax, and TransUnion) once every 12 months. You can request these reports at Checking your reports regularly is free with this option.
  • Use a free credit monitoring service – There are services like Credit Karma that provide free access to your credit scores and reports. You can check your credit as often as you want using these free services.
  • Pay for a premium credit monitoring service – For a monthly or annual fee (generally $10-$40 per month), you can sign up for a premium service that provides daily credit monitoring, alerts you to score changes, provides identity theft insurance, and more features. This can provide extra peace of mind.

Unless you want the extras offered by a paid service, monitoring your credit reports regularly is free. Just make sure you request your free reports spaced out every 4 months or so.

Disputing errors on your credit reports

If you find mistakes or outdated information on your credit reports, you have the right to dispute these errors with the credit bureaus. Under the Fair Credit Reporting Act, the bureaus must investigate disputes within 30 days. If they can’t verify the information, they must remove it from your report. The credit bureaus provide online dispute portals to submit your disputes. This process is free and an important step to clean up incorrect data.

Goodwill letters to creditors

For negative but accurate information on your credit reports, like late payments, you can try sending goodwill letters to your creditors asking them to remove these derogatory marks. This involves writing a letter explaining the circumstances that led to the negative mark and politely asking them to forgive it. Many creditors will not remove accurate information, but some may be willing to, especially if you’ve been a good customer outside of that incident. The only cost is your time drafting these letters.

Changing account types

One way to improve your credit mix is changing an existing credit card to a different type of account. For example, see if your credit card provider will switch your card from a retail store card to a general purpose credit card account. This way, the account will still show up on your credit reports but as a different type that diversifies your mix. Most card issuers will make this switch quickly online or with a phone call. This method doesn’t cost anything other than requesting the change.

Becoming an authorized user

Asking a family member or friend with good credit to add you as an authorized user on one of their credit card accounts is an easy way to benefit from their long credit history. Their account activity will be added to your credit reports, which can raise your score, especially if they have a long track record of on-time payments. There’s usually no cost to become an authorized user. But if the primary cardholder pays an annual fee for the account, they may pass that fee on to you.

Paying down account balances

Having high balances and high credit utilization rates can negatively impact your credit scores. Paying down your balances can quickly boost your scores. Aim to get your balances below 30% of your credit limits on each card. Paying down debt costs nothing but your time and dedication to making consistently higher monthly payments.

Negotiating with creditors

If you have overdue balances with creditors that you are unable to pay in full, you may be able to negotiate a settlement for less than what you owe. This can sometimes lead to the negative marks related to late payments being removed from your credit history. Creditors may accept a settlement since it allows them to recoup at least some of what you owe. Negotiating and settling debts yourself is free, but creditors may refuse to work with you directly. Debt settlement companies charge service fees, often a percentage of your enrolled debt, to negotiate settlements on your behalf which cuts into any potential savings.

Paying off collection accounts

Collection accounts on your credit reports can drag down your scores significantly. Paying off the collections will make them go away after your next credit report update. As with negotiating other debts, you can contact the collections agency to try to settle for less than the full amount you owe. But collectors are often willing to agree to a “pay for delete” arrangement where if you pay a certain amount, they will delete the collection record from your credit history. Paying off collections improves your credit at the cost of whatever settlement amount you agree to.

Adding new positive accounts

One of the best ways to offset negative marks and improve your credit scores is building up a history of positive payment activity. Applying for new credit cards or loans that you make on-time payments on can demonstrate you are now a responsible borrower. Opening new accounts may cost application fees and will require paying interest on any balances you carry. But used wisely and sparingly, new credit can have a big payoff in credit score recovery.

Secured credit cards

If your credit is poor, you may need to start rebuilding with a secured credit card before qualifying for an unsecured card. Secured cards require an upfront security deposit that acts as your credit limit. The deposit is fully refundable as long as you make your payments on time. Secured cards typically have annual fees ranging from $25 to $75. This is one of the few expenses required to rebuild credit from scratch.

Credit repair company services

Hiring a credit repair company can cost much more – often $100 or more per month. Credit repair companies act on your behalf to dispute errors, negotiate with creditors, and take other steps to remove negative items. However, they can’t do anything you can’t legally do yourself for free. Only consider a credit repair firm if you need help staying organized and focused. Otherwise, save your money and put in the work to repair your own credit.

How to minimize costs

The good news is there are many ways to improve your credit without having to pay expensive fees. Here are some tips to clean up your credit on a budget:

  • Take advantage of your free credit reports – Space out your requests annually to monitor all 3 credit reports for free.
  • Dispute errors yourself – Use the credit bureaus’ free online dispute portals.
  • Opt for goodwill letters before hiring a company – See if you can get creditors to forgive mistakes before resorting to professional help.
  • Become an authorized user – Ask a friend or relative if you can piggyback on their credit history.
  • Pay down balances slowly – Make consistent payments over time to lower credit utilization.
  • Comparison shop credit cards – Find the best card that will approve you and has minimal fees.

The most effective strategies like disputing errors and negotiating with creditors just require rolling up your sleeves and putting in some work. With patience and perseverance, you can repair your credit on your own timeline and budget.

How long does it take to rebuild your credit?

The time it takes to rebuild your credit depends on your starting point and how many improvements you need to make. Generally, expect that it will take at least 3-6 months to start seeing your scores trend upward, and often 12 months or more to make significant improvements. The key is consistency. Stay diligent in disputing errors, making on-time payments, keeping balances low, and letting positive activity accumulate.

Timeframes for different credit repair steps

  • Disputing errors – Takes 1-2 credit cycles (2-3 months) to reflect in your scores after errors are removed
  • Paying down debt – Gradual improvement each month as balances drop
  • Settling collections – Removed from reports within 1-2 months of payoff
  • Adding positive accounts – Scores improve after 6 months of on-time payments

Don’t get discouraged if your scores don’t skyrocket right away. Credit repair is a gradual process. Stay focused on making as many improvements as possible each month, and your perseverance will pay off.

Maintaining good credit

The work doesn’t stop once you’ve cleaned up your credit history. Maintaining good credit over time is just as crucial. Here are some tips for keeping your rebuilt credit in top shape:

  • Keep balances low on credit cards – Ideally 30% or less of your credit limit.
  • Continue making all payments on time – Being late can quickly wreck your scores.
  • Monitor your credit – Review reports regularly to check for errors or suspicious activity.
  • Apply for new credit sparingly – Too many new accounts can hurt scores.
  • Don’t close old accounts – Having longer open accounts helps your credit history.
  • Ask for credit limit increases – Higher limits help keep utilization low.

Now that you’ve put in the work to rebuild your credit, be sure to cultivate consistently good financial habits. This will make it easier to qualify for low interest rates and maintain access to new credit as needed.

Key takeaways

  • Monitoring your credit is free with your annual reports and services like Credit Karma.
  • Disputing errors, negotiating goodwill removals, and adding positive accounts can be done yourself without paying fees.
  • Paying down balances and paying off collections should be budgeted for just like any other debt payments.
  • Patience and perseverance are the most important factors, as credit repair takes time.
  • Ongoing good financial habits are crucial for maintaining good credit long-term.

While professional credit repair services often overpromise and charge expensive fees, you can repair and rebuild your credit successfully on your own. Focus on consistently making smart financial decisions, and you will see your credit scores reflect your hard work.

Frequently Asked Questions

How can I raise my credit score quickly?

There are a few actions that may quickly boost your credit score:

  • Pay down credit card balances to lower your credit utilization ratio
  • Become an authorized user on someone else’s credit account to benefit from their good payment history
  • Dispute and remove any errors or outdated items dragging your score down
  • Pay off collection accounts to get them deleted from your credit reports

Just don’t expect any overnight fixes – be patient and let your repeated good financial habits compound over time.

How much does it cost to hire a credit repair company?

Credit repair companies typically charge between $100 and $300 per month for their services. They also often ask for upfront fees before beginning work, which can total hundreds or even thousands of dollars. Add up monthly fees over a year or two and the total cost for credit repair services can get very expensive.

Can I repair my own credit for free?

Yes, it is absolutely possible to repair your own credit for free by taking steps like:

  • Getting and reviewing your free annual credit reports from
  • Disputing inaccurate or outdated information on your credit reports
  • Contacting creditors directly to negotiate goodwill removals or settlements
  • Paying down balances and keeping credit utilization low
  • Making all payments on time going forward

The only costs involved are time and focus. But many people successfully rebuild their credit on their own with patience and persistence.

Should I pay off collections or negotiate settlements?

If possible, try negotiating a “pay for delete” arrangement where the collection agency agrees to remove the account from your credit reports in exchange for paying a settlement amount. Get any such agreement in writing first before paying. If the collector won’t agree to delete, then you may be better off waiting out the account since paying it alone won’t remove it from your history.

How long do late payments stay on your credit?

For installment loans like mortgages or auto loans, late payments typically fall off your credit reports after 7 years. For revolving credit like credit cards, late payments generally stay on your credit for 10 years after the date you initially missed the payment.

You may be able to get late payments removed earlier by negotiating goodwill letters or credit repair assistance. But if not, you’ll need to wait out the clock for them to disappear.


Rebuilding your credit takes time, commitment, and smart financial habits – but it does not have to cost you a fortune. While hiring credit repair firms can get expensive quickly, you have the power to fix your credit yourself for free. Take advantage of your free credit reports, dispute errors, negotiate with creditors, pay down debts, and let your hard work compound. With patience and focus, you can clean up your credit history on your own timeline and budget.

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