Are Credit Repair Companies Trustworthy? Our Team Investigates

Are Credit Repair Companies Trustworthy? Our Team Investigates

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated August 10, 2021

Bad credit can make life harder. Building good credit isn’t easy either. Plus, weak credit can make it difficult to get approved for affordable credit products. You may not even be able to get an apartment if a landlord pulls your credit and thinks you won’t make rent. 

When those things occur, it can be tempting to hire a credit repair company. The only problem is that many credit repair companies aren’t legitimate and will mislead you into believing they can do more than they actually can to fix your credit. 

Tips On What To Look Out For With Credit Repair Companies

Here are some common red flags with sketchy credit repair companies: 

False Promises

These companies often mislead Canadians by promising to increase their credit score or erase a black mark from their credit report for a price. However, no one can magically fix bad credit or remove negative information from a credit report if it’s accurate. The company can only dispute an error for you and ask a credit bureau to remove it from your report.

Quick & Easy Solutions

No matter what “guarantee” they offer, credit repair companies can’t solve your financial problems or get rid of your debts. They can only help you as much as you can help yourself. Most things a credit repair company claims they can do, including the ability to dispute errors on your credit report, you can do alone for cheaper.

High-Interest Loans

Some credit repair companies offer loans with high-interest rates as “solutions” that allow you to cover debts and raise your credit score with good payments. While these loans can be useful during a financial crisis, they also encourage you to accept more debt, which may not be affordable due to the high rates and fees involved. 

Lookout Watch Our For These Types Of Debt

Loans Canada Lookout


What Borrowing Rights Do You Have? 

Before you apply for any financial service, understand your rights as a consumer. You aren’t obligated to purchase anything until you’ve signed an agreement. Here are your rights when it comes to credit repair companies:

  • Guarantees – In Canada, legitimate credit repair companies aren’t allowed to misrepresent their services or promise they will fix your credit. Any company that offers a 100% guarantee is probably trying to take advantage of you.
  • Cooling-Off Period – Credit repair companies are also legally obligated to give you a grace period of 10 days from your contract’s start date, during which you can cancel a purchase and get fully refunded without penalty.  
  • Contracts – No company can sell you a product without giving you a written and dated contract beforehand. The contract should list any legal rules and costs involved.  
  • Upfront Payments – No legal credit repair business will ask you to pay anything in advance either. Until the agreed-upon service is purchased and there’s a notable effect on your credit, they can’t charge any fee or security deposit.

Wondering if someone is using your identity? Find out how to tell if you’ve been a victim of identity theft.

Should You Use A Credit Repair Company?

Remember, there’s almost nothing a credit repair company can do that you can’t do yourself with patience and timely payments. If you’re not willing to put forth the effort, hiring a credit repair company can take the stress off your shoulders, but you’ll have to pay for it, which may add to your financial problems.

Before you look into credit repair companies, speak with a financial advisor, credit counsellor or Licensed Insolvency Trustee to get the best advice possible. These real professionals can help you determine if a credit repair company seems trustworthy or refer you to more effective and affordable options.

What To Do Before Working With A Credit Repair Company

While credit repair companies can be useful, they aren’t always a great solution for building or improving credit. Plus, fake companies could use your desperation to manipulate you into buying products that don’t actually help.

So, before you work with a credit repair company, take these precautions:

  • Research the company and confirm its reputability
  • Check customer reviews and consult a financial professional 
  • Compare the products, rates and fees from several companies
  • Read the fine print of any contract or service agreement they offer
  • Look their organization up in the Better Business Bureau database

Learn more about the cost of credit repair

Be Careful Around Credit Repair Companies

Some credit repair companies aren’t helpful and many just want to get every penny they can out of you without offering a lasting positive effect on your credit. Before you buy any of their products or services, don’t forget to do research, so you won’t get caught off guard by a misleading credit repair company, now or ever.  

Rating of 5/5 based on 2 votes.

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and traveling the world in search of the coolest sights our planet has to offer. Bryan uses the BMO Cash Back Mastercard to earn cash back on everything from boring bill payments to exciting excursions. He is also a strong saver, holding both a TFSA and an RRSP account in order to prepare for his future while taking full advantage of tax benefits.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Make Smarter Borrowing Decisions

Whether you have good credit or poor credit, building financial awareness is the best way to save. Find tips, guides and tools to make better financial decisions.

Save With Loans Canada

Special Offers

50 Free Trades Offer

50 Free Trades Offer
Ends August 31st, 2022

Almost $500 in commission-free trades. Code “50TRADESFREE”. Conditions apply.

View Offer
Earn 5% Cash Back With Neo

Earn 5% Cash Back With Neo
No annual fee!

Earn an average 5%¹ cash back at thousands of partners and at least 1%² cashback guaranteed.

View Offer
Build Credit With Refresh

Build Credit With Refresh

Build credit while spending money with the Refresh Financial VISA card.

View Offer
Build Credit For $7/Month

Build Credit For $7/Month

With KOHO’s prepaid card you can build a better credit score for just $7/month.

View Offer
Industry Spotlight

What's happening with Canada's credit industry?

addy ⎯ Making Real Estate Accessible To All Canadians

addy ⎯ Making Real Estate Accessible To All Canadians

Check out our interview with addy; a platform that allows Canadians to invest in different properties across Canada with as little as $1.

Read Post
Find The Best Rate
In Your Region
Best Personal Loan Provider by Greedy Rates

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Keep Track Of Your Credit Score

Subscribe with Credit Verify to monitor your credit rating and get your free credit score.