Credit Repair Myths

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There are many false beliefs when it comes to credit repair which cause failure on the side of the borrower. These are some of those myths. 

Paying off Delinquencies can Fix Your Credit Immediately

Although getting rid of those balances can help boost your credit, it does not help as much because charge-offs and collection accounts will still appear even after you’ve paid them. What you can do instead is to talk to the creditor who reported the account and ask for it to be removed in exchange for your payment. 

Dispute all Reports

Not only is it difficult to dispute all entries on your credit report, but credit bureaus may see this act as shady. In addition, by disputing everything in your credit report, there might be some positive entries that you are actually removing. Although there are entries in your credit report that won’t easily come off, you can slowly improve your credit by working on your current accounts.

Close All Accounts

Closing all accounts will not help in repairing your credit, in fact, it can cause even further damage. By closing accounts, especially old ones, your average age of credit will be shortened and can lower your credit score even more. Creditors love borrowers with a lengthy credit history because it shows that they are an experienced borrower.

Additionally, closing your accounts can lower your credit limit. Another portion of your credit is scored based on how you utilize your credit limit. The higher your credit limit, the better it is for your score, because it keeps your balances below the limit.

Apply for New Credit

While it helps your score to have a good mix of credit types, applying too many at a time can hurt your credit score. Too many inquiries may be seen as a suspicious act, and opening new accounts can also shorten your average age of credit. Make sure you only apply for credit that you really need and which you are likely to qualify for.

For the meantime, what you can do is to concentrate on your current, active accounts, especially the older ones. Reduce your balances on those accounts and make sure to pay on time every time.

Hire a Credit Repair Company

Many people mistakenly think that credit repair is a complicated task which cannot be done on your own. They feel overwhelmed which is why they prefer to hire a credit repair company, believing that these companies can solve their problems. On the contrary, these companies do not have magic solutions, and they really have nothing to offer which you cannot do on your own. It is still your responsibility to make payments on time, and pay off your balances, so instead of paying these companies, use the money to pay off your dues.

Negative Items Such as Bankruptcies Cannot be Removed

Any form of negative listing such as repossessions, foreclosures, judgments, tax liens, and bankruptcies can be removed. Although they might stay there for at least seven years, it’s never impossible to rebuild your credit even after a devastating entry on your credit report.

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