5 Credit Repair Myths
There is a lot of false information floating out there about credit repair and how it affects your credit score. Before choosing a credit repair company, you should be aware of the most common misconceptions about your credit.
Myth 1: You can’t do anything to fix your credit, all you can do is wait.
While it is true that negative items will hurt your score less as time passes, it is a mistake to believe that waiting is your only option. Negative items that show up on your credit report are put there by creditors who may be willing to remove the marks that they put there. In almost every case, the system that puts a mark on your credit report and dings your credit score for a late payment is completely automated. Asking a creditor to remove a negative item is completely within your rights. If your business is worth keeping, a company may be willing to work with you. There may also be incorrect items on your credit report that a credit bureau must remove if it is unverifiable. Credit repair companies do all this and more when working on your behalf. Credit repair companies understand the federal statutes that protect your consumer rights as a user of credit and use those laws on your behalf.
Myth 2: The negative items on your credit report go away once you are no longer delinquent on your debts.
When a debt goes into collections, many people are surprised that they collection account doesn’t get removed from their credit report once they pay off the debt. A savvy consumer may negotiate a payment for deletion settlement where the collection agency promises in writing to remove the negative credit item once the debt is paid, but if you don’t get it in writing ahead of time you are stuck with the paid collection account on your credit. The good news is a paid collections account doesn’t hurt your credit as bad as a open collections account where a collection agency is trying to collect a debt that they either bought or are collecting on behalf of the original creditor. Many credit repair companies have had success in removing collection accounts that are not active, but they rarely get removed on their own.
Myth 3: A good credit score isn’t that important.
In a down economy many individuals are tightening their belt and making due with less. For some this means cutting credit out of their lives and switching to a strict cash budget. By doing this they hope to avoid future debts and pay off the debt that they currently have. You might be tempted to think that in this situation your credit score isn’t too important. The truth is your credit score allows you to do a lot more than borrow money. The military uses your credit score to determine what level of security clearance you can get. Many other employers use your credit score to determine whether you are a reliable individual. Your credit score also determines rate for auto insurance and what kind of cell phone plan you could qualify for. It is nice to be able to rely on credit in the case of an emergency which is another reason to want to have the kind of credit score that shows a creditor that you will pay them back. Finally, it is hard to know where you will be 5 years down the road. Your needs may have changes and you may be making more money but your old credit profile can hang around long after you need to borrow money for a home or a car. A credit repair company can help you yo start taking steps now to prepare for a brighter future.
Myth 4: You have to do credit repair for yourself.
This myth about credit repair exists primarily because the credit repair industry is relatively new. People are just starting to realize what a credit report is and why it is so important. With so many people being hit with unemployment at the same time, a greater need for credit repair is a fact of life. The credit system was never setup to handle the kind of widespread payment delinquency that has been the result of the greatest recession since the Great Depression. Up until this point credit repair has been dominated by DIY experts that advocate for learning all the laws and processes that are involved in the credit repair process. Much in the same way some muscle car enthusiasts would never take their car into the shop for a tune-up, some credit repair elitists think that you should take the time to learn how to do credit repair yourself. If you have ever taken in your car to get the oil changed, you might want to consider handing over your credit repair challenge to a credit repair professional.
Myth 5: Credit repair is expensive.
Not all credit repair companies are created equal. If they don’t advertise a price on their website then you probably will want to avoid them because they will use high pressure tactics to get you to pay a lot of money at once, but it doesn’t have to work that way. Many credit repair companies openly advertise what they charge on their website. The industry standard approach to credit repair is that you pay a one time “first work fee” to get your account setup and then you pay a monthly fee at the end of each month for the service provided for that month. You should expect to pay $100 or less per month. Considering the extra interest you will pay over the lifetime of a loan with bad credit. a credit repair company could be the best investment you could make.