When to choose and credit lawyer versus a credit repair company to fix your credit?

When to choose and credit lawyer versus a credit repair company to fix your credit?

By: Issac Cwibeker, Esq.

In today’s digital world, credit plays a significant role in determining one’s future.  Some landlords or banks won’t even consider you for an apartment or loan if you have bad credit.  A wrong or false credit report or score hurts you.  Therefore, it’s no surprise that many ask if hiring a lawyer is the right way to fix your credit.

I’m a Credit Lawyer in a law firm with a bankruptcy department.  And I’m being brutally candid.  No.  You don’t need a lawyer to fix your credit, but it’s a good idea to have one help you when it’s the right fit.  Let’s explore the difference between credit repair companies and lawyers.  They each have something unique to offer.  But every situation is individual, and it’s up to you to decide what you need.

What is a Credit-Lawyer

A credit lawyer is an expert in credit law, handling debt, fair billing, and fair credit reporting.  They may specialize in a variety of credit-related subjects.  Some work exclusively on credit repair, while others concentrate on debt issues.  A Federal Trade Commission study found that one out of every four consumers had inaccuracies on their credit reports that might negatively impact their credit ratings.  This resulted in them having unfavorable loan terms, which cost them thousands of dollars in interest.  A credit lawyer addresses these issues and can complete the procedure in less time and with fewer errors than you could if you tried to do it yourself.  Suppose you need a trial lawyer to defend you against a creditor’s collection lawsuit.  In that case, you’ll want someone knowledgeable in that area and with trial experience.

What are the laws that Regulate and Affect Your Credit?  The Consumer Laws

In the late 1960s, numerous consumer credit laws directing creditor and credit bureau operations surfaced.  In addition to protecting consumers’ rights, a few of these laws include the Truth in Lending Act (TILA), the Fair Credit Billing Act (FCBA), the Equal Credit Opportunity Act (ECOA), the Fair Credit Reporting Act (FCRA), and the Fair Debt Collection Practices Act (FDCPA).  TILA requires lenders to disclose billing and credit card charges and loan cost information so you can compare and shop around.  The FCBA safeguards consumers’ rights against unfair billing practices and outlines guidelines for disputing errors and unauthorized charges.  ECOA prohibits consumer discrimination based on race, religion, national origin, age, or other protected characteristics or rights.  FCRA requires credit reporting agencies to collect, store, and share data fairly and accurately.  FDCPA regulates how debt collection companies can operate regarding communication with consumers and prohibits unfair debt collection practices.

Hiring a Lawyer to Fix Your Credit

Hiring a lawyer to fix your credit is a safe and effective way to improve your credit.  However, you should hire a reputable attorney to avoid wasting money on an ineffective service.  An excellent way to find a reputable attorney is to ask around.  You could consult your local bar association to determine which attorneys specialize in credit repair.  When you hire a lawyer to dispute credit report inaccuracies, they’re responsible for collecting all the evidence that supports your claim.  They’ll send letters to the credit bureaus, creditors, and the original judgment holder explaining why the information on your report should be removed.  Once the credit bureaus receive a legitimate dispute, they have 30 days to investigate your claim.  If the bureaus find that the information on your report is inaccurate, they’ll remove it from your credit report.

Lawyers are uniquely well-situated to help with credit repair because they also offer a wide range of services to help.  Targeted credit report disputing alone is only one service among many.  Lawyers can negotiate and settle a debt or item and then engage in credit repair as part of the settlement.  Lawyers also use bankruptcy as leverage and may even want to litigate where settlement is insufficient by vacating a judgment.

How much do credit lawyers and their services cost?

A lawyer’s fee structure may vary.  Some charge on a contingent basis, and some charge per hour.  It can cost $500 to $5,000 in total fees or, in some circumstances, even more.  So, do the benefits you get from hiring a lawyer outweigh the steep cost?  Well, it depends on a couple of factors.  1) Your total debt and 2) your current credit rating.

Your total debt:

Hiring a lawyer can make sense if you currently have multiple debts and are considering consolidating them to get a revised payment plan and term.  They will help you negotiate or settle your current debt, increasing your credit score.  This will enable you to get a new loan at a lower rate and help pay off your remaining debt if any.  Usually, if your outstanding debts exceed $20,000, you should consider hiring a specialist credit lawyer.

Your current credit rating:

If you already have a decent credit rating, hiring a lawyer to improve it by a few points may not make financial sense.  For example, suppose you have a credit score ranging between 580 to 640.  This is considered fair, and you will qualify for loans, but the interest rates will likely be higher.  So hiring a credit lawyer to help improve your credit rating will prepare you for more favorable loan terms, which makes sense.  But suppose you already have a credit score of 750 or above.  In that case, an increase in credit score may not make the same impact and, therefore, not as sensible to hire a lawyer.

What is the Difference Between a Lawyer and a Credit Repair Company?

At first glance, credit lawyers and credit repair companies might appear to offer the same services.  However, there are several key differences between the two.

Credit repair companies can have more extensive expertise with credit issues.  In contrast, credit lawyers’ knowledge may be limited to their professional experience with credit law cases.  Credit repair companies usually employ people not qualified to represent you in case of a lawsuit.  So, if things escalate and you need to get legal protection, a lawyer will be able to serve you better.  Credit repair companies also tend to work with volumes of clients simultaneously, so you may not always get customized solutions as you would get from a lawyer.  One disadvantage of a credit lawyer is that they can cost you more than hiring a credit repair company.  But generally, the higher price is worth the service you receive.

It’s important to realize that neither credit lawyers nor credit repair companies can remove negative but legitimate entries on a credit report.  For example, if you fell behind on credit card payments and your credit score took a hit, neither entity can have this wiped from your credit report.

However, suppose you can prove the credit card charges were fraudulent or unauthorized.  In that case, a credit repair company or a credit lawyer can help you get a fair, accurate, and substantiated credit report.

Can’t I Do My Own Credit Repair?

Yes, you can repair your credit and don’t need a lawyer to fix your credit score.  If you are on a tight budget or do not mind spending time learning the basics of credit repair, applying on your own is a great option.  But it is essential to understand that you may risk overlooking important facts or making a costly error.  A credit bureau may refuse your dispute if you don’t present accurate or adequate proof.  It will cost you time and money if you cannot fix it.  So evaluate these pros and cons before handling your credit repair by yourself.

The Federal Trade Commission (FTC) provides clear information and processes for disputing credit report mistakes.  Many of these processes may be completed by you with some basic research on the internet.  You can order free copies of your credit reports ( you can get one every 12 months for free at www.annualcreditreport.com) and dispute errors and inaccuracies by following the processes laid out by the FTC.

Credit Score and COVID-19

While the CARES Act has given a “pass” to Covid-19-related items, it only does so for Covid-related items.  Therefore if a credit situation started before covid, you can’t rely on the credit reporting bureau’s inattention to credit reports during the continuing pandemic.  Once these items return to their state pre-pandemic, there will again be a vital need for credit repair.

Bottom Line Fixing your credit is always 100% worth it.

The average person with negative marks on their credit report loses thousands in their lifetime.  In addition, people with bad credit are more likely to suffer from anxiety and depression.  Not to mention, your credit score directly impacts: 1) your insurance rates, 2) the interest rate on your mortgage, 3) your ability to obtain a real estate rental lease, 4) the terms of your car loan, and 5) sometimes even your ability to get a job.  Therefore, improving your credit can have a significant impact on your life.  Once you fix your credit, you’ll get lower interest rates on your loans.  You’ll be able to qualify for cheaper insurance rates and have more opportunities open to you.

The only question is: how much is it worth to fix your credit?  Hiring a credit repair lawyer to help you improve your credit score by a few points can save you a fortune on interest rates.  There are also other monetary benefits of repairing your credit ratings.  Hiring a lawyer can be expensive, and you should be sure that the difference they make is worth paying for.  Finally, if you are tight on budget, you may consider repairing your credit ratings yourself.  But give yourself plenty of time and make sure not to make any mistakes that can hurt you in the future.