by Ivana

Credit Repair Statistics and Facts

Credit Repair Statistics

The coronavirus pandemic has put the economy in the shade, yet Americans managed to bring their credit scores under the bright lights. With the government’s financial help, reduced consumer spending, and monetary relief tactics like balance transfer cards and loan consolidation, many people were able to pay down their debt and increase their credit scores. Whether you want to get a better handle on your debt, contest any negative elements on your score, and improve it, take a look at the latest credit repair statistics. It doesn’t hurt to stay in the know even if you maintain a healthy credit score. 

Credit Repair Statistics (Editor’s Choice)

  • The American credit repair services market is worth $3.4 billion as of 2021. 
  • Credit reporting firms get updated on 1.3 billion tradelines from 10,000 furnishes each month.
  • Approximately 40 million consumers have a mistake on their credit report. 
  • There are 43,286 credit repair businesses in the US in 2021. 
  • Half of the collections tradelines on credit reports are medical. 
  • The majority of information on credit reports comes from a few large financial firms. 
  • 48% of credit repair clients report 100+ points gain on their credit score.
  • Typical score gains for credit repair clients range between 100 and 149 points. 
  • 67% of credit repair clients report a “good” or “excellent” experience.
  • 44.6% of the credit repair clients request help with 300 – 579 score. 

Credit Repair Industry Statistics

1. The US credit repair market size has reached $3.4 billion in 2021. 

The credit repair services market is expected to decline by 3.1% in 2021, having already dropped by 5.2% between 2016 and 2021. Due to the 30-year conventional mortgage rate and a declining life cycle stage, the credit repair industry has been negatively impacted. 


2. There are 43,286 credit repair businesses as of 2021.

Tha marks a 9% decrease from 2020. The credit repair industry has been declining by 9% annually since 2016. It has a low market presence in the US, with no companies holding more than 5% market share. The states with the highest number of credit repair businesses are: 

  • California – 2,714 businesses
  • Florida – 2,182 businesses
  • New York – 1,240 businesses


3. According to credit repair business statistics, this industry is labor reliant, with wages accounting for 37.7% of revenues.

Purchases account for 11.8%, and rent and utilities account for 4.5% of the revenue. In general, the entire industry depends more on labor than capital. 


The Credit Repair Industry in the US

4. Every month, credit reporting agencies receive updates from approximately 10,000 furnishers on 1.3 billion tradelines. 

Credit reporting agencies like Equifax, Experian, and TransUnion keep more than 200 million files on consumers. Tradelines include individual credit accounts on a consumer report, such as an account for a mortgage loan, student loans, or credit card debt.


Credit Repair Facts

5. 40 million consumers have an error on their credit report. 

This means that 25% to 79% of credit reports have material errors! Fixing a bad credit score is not always a reason people reach out to credit repair companies. Due to a high volume of data, credit score mistakes are pretty prevalent. Hence many consumers hire a credit repair company to investigate and correct the issue. While everyone can fix their credit score mistake by themselves, many consumers decide to split the weight with a professional due to the complexity and longevity of the process. 

(CBS News)

The most common complaint by consumers is not recognizing the debt as theirs, followed by too frequent or repeated calls, not given enough information to verify the debt, debt already paid, and arrest or jail threats. This indicates that the consumers are mistaken about their accounts, or the debt collectors are going after the wrong consumer or asking for an inaccurate amount of money. 


Most Frequent Reasons for Consumer Complaints for Medical and Other Types of Collections

7. Less than one in five people take copies of their credit report each year. 

The best way to identify errors is to obtain copies of your credit report every year and review the information. Yet, only 44 million consumers in the US ask for a copy of their credit report files, credit repair statistics show.


8. One-third of consumers (31.6%) have one or more collections tradelines on their credit reports. 

Just under a quarter (24.5%) of credit reports contain one or more non-medical tradelines. In comparison, nearly one in five credit reports (19.5%) include one or more medical collections tradelines. 


9. Most collections tradelines are a consequence of unpaid bills rather than outstanding loans, and over half of those collections tradelines (52.1%), are medical.

Over 80% of tradelines by a particular creditor or provider and over two-thirds of all collections tradelines (67.5%) are related to accounts that originated with healthcare, utility, or telecommunications companies. 


10. According to credit repair facts, 50% of consumers with only medical collections tradelines have otherwise clean credit reports and show no other evidence of financial instability. 

22% of customers with collection tradelines have only medical debt and are, in general, more reliable payers than consumers with non-medical debt. Medical collections tradelines are also, in most cases, smaller than non-medical tradelines. The median unpaid medical collections tradeline is $207 with an average of $579, while non-medical collections are $366 with an average of $1,000. The debt on credit cards and student loans is even higher, averaging several thousand dollars.


11. The credit card industry provides over half of the tradelines in credit bureau databases.

Credit reporting companies gather information from many industries, but the majority of account information is provided by credit card companies. According to credit repair industry facts, bank cards, retail credit cards, mortgage lenders of service companies, and auto lenders provide the rest of the information in the credit databases. 


Providers of Credit Information

12. The average credit score in the US is 711. 

FICO score and VantageScore are the most popular scoring models in the US. In 2020, the average FICO score reached an all-time high of 711, defined as “prime” by the Consumer Financial Protection Bureau, while the all-time low of 686 was recorded in 2009 as a result of the global recession. The average VantageScore is 688. When it comes to FICO scoring, the US average of 711 falls into the good range.


Average FICO Credit Score in the US Over a 15-Year Period

13. According to credit repair facts, payment history is the most influential credit score factor, accounting for 35% of one’s FICO score. 

Credit utilization is the second most important factor, accounting for 30% of the score. Updates of these factors can significantly change one’s credit score even if there are no other changes. For instance, in 2020, consumers have reduced their credit card debt by 14%, impacting the average credit utilization, which went from 28.8% in 2019 to 25.3% in 2020. 


14. According to credit repair myths, 61% of Americans believe income strongly influences their credit score.

Data shows that income has little influence on one’s credit score — Experian reported that 38% of Americans with perfect FICO scores have an income of $75,000 or under. A smaller percentage of individuals with an income of over $150 000 have perfect FICO scores compared to those making between $76,000 and $150,000 annually. 

 (Motley Fool)

Percentage of Individuals With a Perfect FICO Score by Income Range

15. The average percentage of accounts 90 to 180 days past due (DPD) has declined by 53% since 2019. 

Credit repair business statistics show that the percentage of accounts 30 to 59 DPD decreased by 37%, and the percentage of those 60 to 89 DPD also dropped by 36%. Although it seems like a dramatic decline, the overall percentage of accounts past due in 2020 is relatively small — 0.54% for accounts 30 to 59 DPD, 0.28% for accounts 60 to 89 DPD, and 0.58% for accounts 90 to 180 DPD. 


16. 22.3% of Americans have an exceptional credit score, ranging between 800 and 850. 

Only 4.3% of the population struggles with a credit score range between 300 and 499. Looking at the credit score distribution by percentage of the population, the highest percentage of Americans is in the excellent range of 800 and 850.


Credit Score Distribution By Percentage of the US Population

17. Credit repair statistics unveil that 75% of American adults have a credit card balance above $0. 

The average FICO score for individuals with a credit card balance was 735 in 2020. Credit card balances saw a 14% decrease after a decade-long period of growth. Credit card late payments have also declined. 


18. More than 90% of American adults have a credit card account on their report. 

Credit card debt carries more weight on the FICO score than installment debt. Factors like improvements in payment history and lower credit card balances recorded in 2020 positively affected the FICO scores, decreasing the demand for credit repair companies.


19. Statistics on credit repair show 22% of American adults have a personal loan. 

The average FICO score for individuals with a personal loan was 689 in 2020. The same year also saw a 27% decline in the percentage of personal loan accounts 30 or more DPD. 


The average FICO score for individuals with an auto loan was 712 in 2020. The percentage of auto loan accounts decreased by 22% in the same year. 


21. 44% of American adults have a mortgage.

A mortgage is another highly prevalent and the most significant outstanding debt among Americans, with nearly half of the adult population having it listed in their credit reports. Credit repair business statistics show a 46% drop in 2020 in the percentage of consumer mortgage accounts 30 or more DPD. According to national credit repair data, homeowners had an average credit score of 753 in 2020, 40+ points higher than the national average. 


22. The percentage of consumers with subprime credit scores declined from 33.8% to 30.9% between 2019 and 2020. 

This is a significant improvement considering that between 2018 and 2019, the ratio declined only by less than 1%. Bad credit has wider-ranging consequences than most people think. Not only that it makes it harder and more expensive to get access to certain services and housing, but it can interfere with your job hunting efforts. While not every employer will ask for a credit check, in some industries, and for some job positions, positive credit history is a must. If the job duties include handling cash, getting access to sensitive data, and managing finances, it’s very likely that employers will ask their pre-employment background check companies to obtain applicants’ credit history. 


23. Older generations have a better credit score than younger generations. 

Due to the limitations younger generations face to open new credit card accounts, many young adults can’t even begin to build their credit score until later in life. Credit repair trends show that millennials also tend to have lower credit scores than older generations due to events like weddings and first mortgages that cause major expenses and often result in debt.


Average Credit Score in the US By Generation

24. Minnesota is the state with the highest average credit score (739) in the US, while Mississippi has the lowest (675). 

According to credit repair facts, all US states have reported a spike in their average credit scores. Consumers in 25 US states experienced a rise of seven points, which is above the national norm, credit score statistics show. The remaining 26 states saw an increase of at least three points in their credit scores. It’s interesting to note that states with lower credit score averages experienced the biggest growth. 


Average FICO Score by State

25. Credit repair statistics show one in five American adults has no credit history. 

These “credit invisible” or unscorable individuals are unable to obtain new lines of credit or have difficulties doing so. They also struggle to find reliable housing, as most landlords ask for permission to obtain credit score reports through third-party tenant screening companies. In their eyes, having no credit is often viewed as equivalent to bad credit as they don’t have any credit history available to determine if the applicant is capable of meeting the rental obligations. 

(Motley Fool)

26. The vast majority of information on credit reports comes from a few large banks and other financial institutions. 

More precisely, the top 10 furnishers supply 57% of tradelines, the top 50 furnishers provide 72%, and the top 100 furnishers provide 76% of tradelines. 


27. According to consumer credit repair stats, about 48% of consumers who hired a credit repair company got an increase of 100+ points on their credit score. 

This applies to clients who were using credit score repair services for six or more consecutive months. Those using credit repair companies for one to two months experienced 33% less 100+ point gains. 


28. 32% of consumers have spent over $750 on credit repair services, and 48% of those have reported 100+ points gain on their credit reports. 

31% of consumers state their average cost of credit repair, including start-up costs, monthly fees, and additional fees ranges between $250 and $500, while only 16% report spending between $751 and $1,000. Credit repair industry statistics unveil that clients who use credit repair services for more prolonged periods tend to spend more on these services.


Lifetime Spending on Credit Repair Services

29. The most commonly reported credit score gains after hiring a credit repair company range between 100 and 149 points. 

26% of consumers who have used credit repair services report an increase in credit score in the range of 100 to 149 points. Clients who have used bankruptcy recovery credit repair services increased their credit scores more than clients who have used other types of credit repair services. 53.5% of recipients of bankruptcy recovery services report a boost in their credit score of 100+ points. 


The Most Commonly Reported Credit Score Gains Among Credit Repair Clients

30. Credit repair industry facts indicate that 67% of consumers who have used credit repair services rate their experience as “good” or “excellent.”

Those who have used credit repair services for more than three months reported an increased satisfaction of 71%. Further, 87% of consumers believed their credit repair company’s practices are “professional” or “fair,” while 12% rated their company’s business practices as “shady” or “borderline illegal.” 


Level of Satisfaction Among Credit Repair Clients

31. According to consumer credit repair stats, the highest percentage of consumers (31%) uses credit repair services between three to five months.

23% rely on credit repair companies for six to nine months, 22% use these services for one to two months, and 18% pay professionals to repair their credit score or fix mistakes for 10 months or more. 


32. Credit repair statistics indicate that most consumers (44.6%) reach out to credit repair companies with a credit score between 300 and 579.

33.4% start using credit repair services with a credit score ranging between 580 and 669. Consumers who begin with the lowest credit score (300 to 579) typically receive the most significant boost in credit score, with 49.3% reporting an increase of 100+ points. 


The internet is the favorite spot for consumers looking for credit repair services, although 37.2% prefer to find a provider through referrals. Additionally, 13.4% find credit repair services through credit repair advertising, 2.8% through phone solicitation and only 1% find a company through other channels. 


34. Consumers who find their credit repair company via online search spend more than referral clients. 

55.5% of online search clients spend over $500 on credit repair services compared to 48.9% of referral clients who spend the same amount. Credit repair trends show that these clients experience similar credit score gains, with 27.8% of online search clients and 26.3% of referral clients gaining 100 to 150 points. Clients coming from advertisements or phone solicitations tend to spend the least on credit repair services, with 46.4% of them spending over $500. 


35. According to consumers who have used credit repair services, billing is the most prevalent issue that arises from hiring one.

25.8% of clients felt the credit repair company had kept them longer than needed, and 18.6% even had trouble canceling the services, compared to 55.2% who felt the billing was as agreed. Statistics on credit repair show that referral clients tend to experience fewer billing problems than online search clients, with 61.3% and 51.1%, respectively, reporting no billing issues. Yet, these numbers show that many clients experience billing problems. 


36. The majority of consumers (56.2%) hire a credit repair company to remove negative items from their credit score. 

These negative items include collections, late payments, and charge-offs. 49% of consumers have also received consulting services from their credit repair company, while 48% have used credit repair services to set up a payment plan with creditors. 


The Most Popular Credit Repair Services

37. Credit repair facts show that 55.2% of consumers had collections successfully removed from their credit score with the help of a credit repair company. 

Other items that clients had successfully removed after working with a credit repair company include late payments, medical bills, charge-offs, inquiries, judgments, student loans, and bankruptcies. 


Negative Items That Credit Repair Companies Most Often Remove Successfully

The global pandemic and the financial help from the government enabled Americans to keep up with payments, pay down debt, and improve their overall credit scores. The improvement in credit score in 2020 happened at a faster pace, registering a dramatic spike in only a few months. This might result in another round of dramatic changes happening quickly if consumers continue to struggle financially. The coronavirus response by the government is subject to change as the pandemic and vaccination progress, which might leave millions of Americans struggling to pay their debt if the government decides to cut or decrease the financial protections. 

President Biden announced shifts in how credit data is collected, which is expected to be one of the most significant changes in the US financial history that will shake up credit repair statistics. The President’s idea is to form a public credit reporting agency that would replace credit bureaus like Experian, Equifax, and TransUnion while excluding adverse information such as medical debt or delinquencies on predatory loans. The initiative will ease access to financial products for millions of struggling Americans, creating a massive shift in how creditworthiness is tracked in the US. 

Sources: IBISWorld, IBISWorld, CFPB, CBS News, CFPB, ValuePenguin, Experian, Motley Fool, FICO, Motley Fool, CFPB, FinMasters