Can using a credit repair company hurt my credit score?

There are a few ways a credit repair company can hurt your score that you will need to be careful of. For starters, some credit repair companies use a third party lender, mortgage broker, etc. to get a copy of your credit reports. Not only is this of questionable legality (may not fall under "Permissible Purposes" in the Fair Credit Reporting Act), but it counts as a hard inquiry that will drop your score by a few points.

The larger risk to your credit score, however, comes about when a credit repair company attempts to dispute something on your credit reports that is tied to an unpaid debt. For example, if you have an unpaid collections account on your reports. This is particularly problematic because the collections company may have given up on trying to collect the debt, but when you dispute it, they will see that you now care about your credit. Because of this they may start reporting the debt again which re-ages the negative listing. The newer a negative listing, the more damage it does to your credit score. And on top of that, now that the creditor knows where you are, they may go so far as to sue you to collect the debt.

Of course, all this could happen if you try to dispute an unpaid debt yourself or with the help of a credit repair company. It's just that when using a credit repair company, you almost certainly won't be doing as much research and may not be aware of the risks. A good credit repair company should only dispute the negative items on your credit reports that you ask them to (watch out for companies that dispute everything), so work with them to make sure you only dispute items that won't come back to bite you.