The first step toward repairing your credit is educating yourself on credit repair myths. For most people, the Internet is the easiest way to access that information. But as with any other common financial problem, you’ll find that the Internet abounds with misinformation and services that, unfortunately, might actually cause more harm than good. We’ve rounded up the most popular credit repair myths so you can save yourself from more unnecessary financial angst.
Credit Repair Myths:
Myth #1: If you pay off your debts, those negative items will dissolve from your credit report.
Paying your debts will increase your credit score, but the damage may already be done. Negative credit items remain on your credit report for seven years, which is a very long time to wait. Especially when you’re facing denials for loans or higher interest rates because of your credit history. The only other way to get an item removed is if you believe it to be inaccurate or outdated. In that case, you can hire a service to dispute the information with the credit bureau or undertake the process yourself. Resolving to pay your debts on time will go a long way toward boosting your credit profile, but it won’t rid your score of the effects of the “bad” debts.
Myth #2: Credit repair companies are a scam.
This is the most popular question when it comes to credit repair myths. Not all credit repair companies are created equal, but legitimate and well-respected companies do exist. Successful and reputable credit repair companies will have a trained analyst review your credit report, discuss any questions and concerns you may have, and go to work on your behalf with the credit bureaus to dispute incorrect or outdated information that is hurting your credit rating. Although you could commence the process yourself, you may choose to save considerable time and energy by handing the reins to a trained professional.
Myth #3: Bankruptcy is my only option.
Bankruptcy should be viewed only a last-resort. Bankruptcy might provide an immediate fix to a devastating financial situation, but your credit score will take a while to recover. Before you take this leap, make sure you have investigated all of the possible options available to you — and better yet, speak with a trained credit counselor who can possibly point you in a direction better suited to your financial situation.
Myth #4: You won’t see improvements in your credit score for a very long time.
Change isn’t going to happen overnight, but it may happen faster than you think. Credit bureaus will generally make marks to credit scores every 30 days, and hard inquiries (a credit check done by a lender when you’re trying to open a new account, for instance) are reported soon after they occur. You might see some small changes if you check your credit report once a month, and more significant improvements will be visible within the first year of working to repair your credit situation.
Myth #5: Negative items can be added back to your credit report.
You may have heard that credit bureaus can add negative events back on your credit report after they’ve been removed due to a dispute. The only way that can happen following a dispute is if the credit bureau finds out that a debt may be valid after it has been contacted to remove the item for being incorrect or outdated. But in most cases, items erased from your credit report won’t make a reappearance.
Myth #6: You’re better off repairing your credit on your own.
You can, of course, gather all of the necessary information, write to the credit repair companies, and request removal of any items that you believe to be erroneous. This does, however, require a great deal of patience, as well as legal and financial finesse. That’s why it’s a good idea to hire a professional, who is trained to negotiate with the credit bureaus and secure the best possible outcome for you.
Myth #7: Credit reports are generally accurate.
Errors are more common than you’d think. A 2012 study from the Federal Trade Commission revealed that one in five Americans have been plagued with an error on their credit report. Most people make it a habit to review their credit card statements monthly to ensure they recognize all charges. The same should be true for your credit report — because you never know what incorrect and damaging information could be affecting your credit score.
It can be tough to separate fact from fiction when you’ve resolved to repair your credit. At Ovation Credit, we are standing by to help answer your questions about your credit score and reports. Contact us today to learn more about how we can help you build a stronger financial future.