credit repair
The process of identifying and disputing errors on a credit report and implementing strategies to improve a damaged credit score.
Example
“Credit repair after the bankruptcy took three years of consistent on-time payments.”
Memory Tip
REPAIR — like fixing a damaged wall. Takes time but the damage can be undone.
Why It Matters
Credit repair is crucial because your credit score affects your ability to obtain loans, credit cards, and favorable interest rates. A damaged credit score can cost you thousands of dollars in higher interest payments and may prevent you from qualifying for housing or employment opportunities.
Common Misconception
Many people believe that credit repair companies can magically erase legitimate negative information from their credit reports. In reality, only inaccurate or unverifiable items can be removed, and you can dispute errors yourself for free without paying a credit repair company.
In Practice
Suppose you discover a $2,500 collection account on your credit report from a company you never did business with. You file a dispute with the credit bureau, the collection agency cannot verify the debt, and it is removed from your report. This removal could raise your credit score by 50-100 points, potentially lowering your mortgage rate from 7 percent to 6.5 percent and saving you $150 per month.
Etymology
From Latin 'credere' meaning to trust plus Latin 'reparare' meaning to restore.
Common Misspellings
Check your credit score free — no impact
Related Terms
More in credit
Other credit terms you should know
See Also
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