MIAMI, April 20, 2021 /PRNewswire/ — In a nationwide survey, 61.6% of U.S. adults (ages 25+) who paid for professional credit repair services received a 65 point credit score increase or higher. Credit repair services were also shown to be more effective when consumers stayed with the repair company for over 6 months. But buyer beware! 12% of respondents thought the repair company’s business practices were ‘Shady’ or ‘Borderline illegal.’
According to new research from transformanceusa.org, 61.6% of consumers who paid for professional credit repair services for 6 months or more saw an increase of 100 points or more to their credit score. Only 12% of respondents said they had a credit score increase of 24 points or less.
Overview of Credit Repair Services – Credit repair is a $3 billion per year industry in the U.S. according to IBIS World. Companies that provide credit repair services help consumers with bad and/or damaged credit. Common services offered are the removal of negative items from the customers’ credit reports (late payments, charge offs, collections), setting up payment plans with creditors, and debt consolidation plans.
Impact of the Study – Many personal finance experts question if credit repair companies are truly effective and question if credit repair is ethical. The transformanceusa.org study surveyed 500 U.S. adults ages 25+ in February 2021 and found that a surprisingly high percentage of respondents indicated a positive credit score gain, especially when the respondents stuck with their credit repair company for 6 months or more, and mostly reported a favorable user experience. Some of the key statistics found were:
- The most common credit score gains reported were 100 to 149 points (26% of respondents) and 75 to 99 points (17.2% of respondents) compared to only 8.4% who reported a gain of 0 to 24 points
- 48% of respondents who used credit repair services for 6 months or more saw an increase of 100 points or more to their credit score
- 31% of respondents said the lifetime total of all monthly fees, start-up costs, and additional fees was between $250 to $500 (most prevalent answer)
Consumers’ Surprising Criticism of Credit Repair Companies – Even though consumers’ results (as measured by credit score increase) were very impressive overall, a significant percentage of consumers criticized their companies’ business practices and billing. Key statistics:
- 12% of respondents thought the repair company’s business practices were “Shady” or “Borderline illegal”
- 25.8% thought the credit repair company kept them as a client longer than it should have taken – They felt “strung along”
- 18.6% said the credit repair company made it difficult to cancel
For questions about the survey or to comment on the findings, contact [email protected]