Got bad credit? Maybe you’re wondering what you can do to fix your credit score. After all, your credit score isn’t just a number – it’s not an understatement to say that it’s the key to unlocking financial success in our current economy. You can’t easily buy a house or a car without a high score, or pursue any number of other opportunities.
But why is your credit score low (if the answer isn’t immediately obvious) and what can you do to improve it? There is a lot of information out there about credit repair; however, you can’t trust everything you read online or hear from friends, because there is also a lot of incorrect and conflicting information about credit repair. It’s hard to know what to believe! Do advertisers who promise to erase bad credit in the blink of an eye really do it? Is your friend who told you that you just have to pay off your old debts right (and if so, how do you go about that)?
Our law firm is dedicated exclusively to the areas of credit repair and identity theft. We have extensive experience in this field, and we know what you need to know when it comes to separating the facts from fiction about credit repair. We want you to make smart decisions about your financial future and so you don’t become a victim to a credit repair scam.
Let’s explore some of the most commonly accepted credit repair myths below!
Myth: Paying Off Debts Will Immediately Improve Your Credit Score.
Truth: Paying Off Debts Can Improve Your Credit Score, But Not Immediately, And It’s Not The Only Thing That Matters.
This is one of the biggest credit repair myths! Many people have this misconception that no debt equals a great credit score and massive debt equals a bad credit score, but that’s not exactly the reality of how credit works. It’s more nuanced. The credit system essentially revolves around responsible debt management – you have to incur debt (take out a load, use a credit card, etc.) to be able to establish your credit score in the first place, though as long as you are making regular payments on time, the debt you have reflects positively on your score.
All that to say – paying off debt IS positive and smart, and you should do it if you have outstanding balances, particularly if they are large ones! However, if you have debt that is in collections, even if you pay it off, it still may leave a negative mark on your credit report from having gone to collections in the first place.
Also, know that your credit score considers other factors like the length of your credit history, the types of credit you have, credit inquiries, and more – it’s not just about debt, so it may take time for paying off old debts to make an improvement. Realistically, a holistic approach is going to be the answer to seeing your score go up.
Myth: Closing Credit Card Accounts Will Immediately Improve Your Credit Score.
Truth: Closing Old Accounts Is Actually One Of The Worst Things You Can Do – It May Do The Opposite And Lower Your Score!
Again with that word “immediately” – watch out for that word! It’s used by a ton of scammers who want to prey on desperation; there are things to make credit repair faster, but there is no such thing as “immediate” or “instant” credit repair, as we just mentioned above!
Like we also mentioned above, your credit score is what it is because of a number of factors. One of those factors is the length of your credit history. If you close old accounts, they “disappear” from being counted in that score, which shortens the average age of your accounts and can lower your score. It also reduces your overall available credit, another negative factor.
Rather than closing old accounts, it may be better to keep them open but make sure they are only used occasionally and that they are always paid on time. You don’t want old accounts to hurt you, but closing them won’t help you, either!
Myth: You Only Have One Credit Score.
Truth: There Are Actually Multiple Scoring Models, And There Are 3 Credit Reporting Agencies That May Have Different Information About You.
FICO is the most commonly used credit score, but it’s not the only one you might have. There’s one called VantageScore, and there are even more that other lenders may use to assess your credit-worthiness. There is not just 1, but there are 3 credit reporting agencies – Equifax, Experian, and TransUnion – and they all may use slightly different information which could lead to variations in your scores. If you are starting the journey of credit repair, a good place to begin is to check your credit reports from all three agencies to ensure the information is all accurate and to get a complete picture of your credit health.
Myth: You Can’t Remove Negative Information From Your Credit Report.
Myth: You Can Remove Negative Information From Your Credit Report.
Both Are Misleading Credit Repair Myths!
Truth: You Can’t Simply Erase Accurate Negative Information, But You May Be Able To Get It Removed Through Other Means, And You CAN Work To Get Inaccurate Information Removed.
Avoid companies or services who promise to magically (or “immediately”) remove negative information from your report. If it’s legitimate – late payments, tax liens, foreclosure, etc. – no one can remove it outright. However, that doesn’t mean it can’t be removed at all (or mitigated!).
- You may be able to request a goodwill adjustment, which is essentially your creditor removing the negative mark because you have a good history with them otherwise.
- You may be able to negotiate the removal of information in exchange for paying the debt, something known as a pay-for-delete agreement, though not all creditors are willing to do this.
- You may be able to rehabilitate federal student loan debt by making a number of agreed-upon payments.
If there is INACCURATE information on your credit report, either due to mistakes made by the credit reporting agencies or due to unauthorized hard inquiries, then it is your legal right (thanks to the FCRA, the Fair Credit Reporting Act) to dispute this information! For example, if there is a payment reported as late but you made it on time, you can contact the credit bureau to dispute the error. They are legally required to investigate disputes and correct inaccurate information.
Myth: DIY Credit Repair Is As Effective As Working With A Professional
Myth: Any Credit Repair Service That Is Legitimate Will Be Effective
Truth: Working With A Credit Repair Lawyer Is The Safest And Most Effective Credit Repair Strategy
This is maybe the most consequential credit repair myth. Many people who are wanting to repair their credit score think that a DIY approach will save them money and be just as good, but this couldn’t be farther from the truth. Credit repair isn’t easy (or everyone would have an excellent credit score!); it’s also not straightforward, and there are a lot of mistakes you could make along the way if you’re not careful. It’s also time-consuming.
Even if you find a legitimate credit repair company, not a scam, they’re limited in terms of what they can do on your behalf. They can’t give you legal advice, and they can’t take legal action on your behalf if it turns out that the credit bureau owes you compensation, or if your case needs to go to court. That’s why working with a credit repair attorney is the best route in most cases!
At Loker Law, we’re completely dedicated to credit repair law. We know means of recourse that credit repair services likely don’t use, and we will use the full extent of the law to help you get your good credit back! Our firm will take the burden off you so you can focus on living your life, rather than worrying about your credit score. Call today to schedule a free consultation and discuss your next steps with us!
