What to Look for in a Contract with a Credit Repair Agency

Your most important tool against bad credit repair deals is your credit repair contract. Before you sign any kind of contract with a credit repair agency, you need to make sure you're protected.  

Most contracts are written by the credit repair agency and are naturally written more for their benefit than yours. That said, if you know what to look for, you can make sure that everything you need is covered in the contract. 

Here are the most important clauses to look for in any credit repair contract. 

What They're Agreeing to Do 

• The contract should explicitly state exactly what the credit repair agency will do for you. 

For example, they might commit to sending X letters to X agencies to help you remove items from your report. They might agree to follow up with those companies, as well as to advise you on lawsuit opportunities. 

• If you're having them also take on a debt consolidation role, make sure you also cover all your bases there. The agreement should spell out explicitly how the consolidation process is handled and what kind of support you'll have during the process. 

The Cost Structure 

• The contract should contain details on how the program is priced. Any implied verbal guarantees should be written into the paperwork. There should be no additional costs that you don't understand, no fine print with extra fees. 

• Different credit repair agencies charge differently. Some require an upfront fee, others don't. Some charge a percentage of debt and some charge a flat fee. 

• If you're just having the repair agency remove items from your credit report for you, usually the payment will be made in the form of a "per item" fee. For example, an agency might charge $250 for each item they can remove from a credit report. 

Make sure you understand the cost structure and any additional costs before signing the paperwork. 

How Long before You Can Expect Results 

• The contract should have a set duration. Six months to one year is a good period of time for an extensive credit repair project. 

• If a contract doesn't have a set duration, make sure you have a crystal clear cancellation period. After all, if you've seen no results for six months, you want to make sure you can back out and find someone else to help you. 

These are some of the most important things you should look for in a credit repair contract. Before you sign anything, make sure you read over every line and fully comprehend everything you're signing. If the contract accurately represents everything that you talked about verbally and you believe it's a good deal for you, then sign the paperwork.