What Is the Difference Between Credit Repair and Credit Restoration?

When you search for credit repair companies in Houston, Texas, a lot of options will appear on your screen, including companies offering services from credit repair, credit restoration, and credit building to credit counseling services.

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There are numerous services available that are directed at helping consumers raise their credit scores–but what do these terms mean?

As a consumer, it is extremely important that you understand the different terms associated with improving your credit so you can choose what services suit your credit needs the best. One way to improve your credit score involves credit repair; another popular term used by companies that offer credit repair services is “credit restoration.” These two terms are often used interchangeably, so it’s important to fully understand what restoring credit means.

What Is Credit Restoration? 

Essentially, credit restoration and credit repair are the same thing. “Credit restoration” is a term that credit repair companies have adopted to describe what they do. Credit repair is the process of disputing information on a consumer's credit report that is incorrect and then working to have those items removed from the credit history in order to boost credit scores.

It is important to note that credit restoration is not the same as credit building. Credit building does not involve disputing and removing items from a consumer's credit report–credit building is all about helping to improve overall credit status. The credit repair or credit restoration process involves fixing mistakes made in the past, while the credit building process focuses on future decisions that help your credit score grow. 

Credit restoration and credit counseling are two different things. While credit restoration organizations charge for their services, credit counseling organizations are usually nonprofits and provide advice for free. Credit counseling helps consumers improve their financial situations with strategies such as debt management and credit education. When you are having financial difficulties, it is reassuring to know that sessions with a credit counselor are free. 

Are Credit Repair and Credit Restoration Different? 

The terms “credit repair” and “credit restoration” refer to the same process, and both involve removing inaccurate information from your credit report that could damage your credit rating. Doing this will ultimately improve your credit score. That said, the term “credit restoration” most often refers to the services offered by a company in exchange for payment. “Credit repair” can be used in the same way, but credit repair doesn't have to cost money. If you don't want to outsource your credit repair activities, you can also fix the errors in your credit report yourself for free. 

According to the Credit Repair Organization Act (CROA), a credit restoration company should notify its consumers of this option in writing. This makes sure that the consumer knows they can reach out to a credit bureau to dispute any accuracies without paying a dime.  

Are Credit Restoration Companies Legal? 

Yes–the right to credit repair or credit restoration is protected by federal law and is legal in all fifty states. The Fair Credit Reporting Act (FCRA) and the Credit Repair Organizations Act (CROA) regulations and guidelines apply to credit repair companies in the United States. CROA was enacted in 1996 and clearly articulates what credit repair companies are allowed to do and what they can’t do to remain compliant with federal law. As per the CROA, credit repair organizations need to notify their customers of the following rights: 

  • Customers have the right to dispute their own credit report information 

  • Customers can sue the credit repair company if they violate the CROA


Quite simply, credit restoration (also referred to as credit repair) is the process of disputing the accuracy or verifiability of information in a person’s credit report. Disputing information in your credit report with the credit reporting agencies, creditors, and collection agencies is a legal right afforded to consumers through provisions of the FCRA and other federal consumer protection laws.

Of course, the process of credit repair can be daunting, so experts at credit restoration companies in Houston, such as The Phenix Group, can do the heavy lifting for you and make the process a breeze.

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