Credit Report Repair Myths Exposed!
Credit Report Repair Myths Exposed!
Credit Report Repair Myth #1
There are negative listings, such as bankruptcies and foreclosures, which are impossible to remove from the credit report.
There is no type of negative credit listing that cannot be removed from a credit report by you. Negative items, such as bankruptcy or unpaid debts, are certainly more difficult to remove from the credit report, but this has more to do with the operational systems of the credit bureaus than with the severity of the bad credit item.
For example, judgments and tax liens are severely negative listings, yet are generally less difficult to remove.
Credit Report Repair Myth #2
If I build enough good credit, it will offset my bad credit and make me credit worthy.
Any amount of bad credit is devastating to your chances of being approved by a credit granter. Most credit grantor’s never actually look at your credit report. A computer pulls your credit report, calculates debt-to-credit ratio, payment history, account history, etc. The system will calculate your credit score, then decides to accept or deny you credit.
Even one or two late payments can usually trigger a credit card or personal loan denial. The slightest amount of negative credit will cause the interest on an auto loan to increase dramatically. You will probably find that even a little bad credit, regardless of how much good credit you have, is an unacceptable barrier to credit approval on request for large amounts of credit – like a mortgage loan.
Credit Report Repair Myth #3
After you pay off a debt, it disappears from your credit report.
A credit report shows the whole credit history. All debts – even if they’re paid off – are included. Negative credit information can stay on your report for 7 years. A bankruptcy can stay for 10 years.
For example, if you pay a collection that has been showing on your reports for a few years, it will simply update that item to show as a “paid collection”. The updated collection account will then re-report with the new status for an additional seven years. The only way to avoid this is to force the collection agency to sign a paid release form upon payment of the debt.
Credit Report Repair Myth #4
If I declare bankruptcy, I can begin my credit report all over with a clean slate.
Many bankruptcy attorneys do not adequately understand or explain the effects of bankruptcy to their clients. When you file for bankruptcy, every credit account that you decide to include in bankruptcy will show on your credit reports as “included in bankruptcy”.
Additionally, a bankruptcy filing and bankruptcy discharge listing will appear in the public records section of your credit report. Because so many negative items are attached to the bankruptcy, it becomes difficult, though not entirely impossible, to remove all traces of the bankruptcy. If at all possible, you should avoid bankruptcy at all cost.
Credit Report Repair Myth #5
You can pay less than the minimum monthly payment without penalty.
Not at all. You must send in the minimum amount required by the due date or the creditor may consider your payment late and charge additional fees. The creditor may even report it to a credit bureau. If you ever have difficulty making your payments, always contact your creditor. They will usually be willing to work with you, especially during our current economic crisis.
Credit Report Repair Myth #6
When I pay off a past-due account, such as a charge off or a collection account, it will show “paid” and will no longer be negative.
It is quite difficult to restore your credit without somehow satisfying your outstanding debts. However, paying an outstanding, delinquent debt you will change the account status to paid collection, paid was late, or paid was charged off – which will still stand out as a very negative credit report listing.
Sometimes paying off a debt will actually hurt you. Because these types of collection accounts are allowed to stay on your credit report for a maximum of seven years.
When you have outstanding debt, it is almost always prudent to seek professional credit repair help so that you may settle your debts while creating a reasonable possibility of deletion of the negative listing at the same time.
Credit Report Repair Myth #7
Requests or Inquiries for credit reports can’t hurt my credit score.
At the end of each report will be a log of all inquiries into your credit report. An inquiry notation is made each time someone requests a copy of your credit file from each credit bureau. Every company that receives a copy of your credit profile will be listed under this inquiry section of your credit report.
Lenders do not like to see a lot of inquiries on a credit report. Excessive inquiries can result in a credit denial as easily as bad credit. However, not all inquires are viewed negatively. Promotional inquiries have no impact on your credit score. These types of inquiries are simply used to extend you “pre-approved” credit card offers that you often receive in the mail. You can even opt out of promotional inquiries if you wish by contacting each credit bureau.
Credit Report Repair Myth #8:
A divorce decree separates joint accounts.
Divorce does not cause anything to happen automatically to your credit report. To protect your credit rating, pay off and close all joint accounts, then reopen new accounts as a single account owner.
Credit Report Repair Myth #9:
Credit repair is too complicated to do myself. I would have to hire a credit repair company.
In some cases involving a difficult situation, a credit repair company can be of great assistance. A credit repair company can also help with clarifying the finer points of the laws regarding credit repair.
However, it is every consumer’s right to work on their credit reports themselves.
Credit Report Repair Myth #10:
If I get in debt too deep, I can just file for bankruptcy.
The bankruptcy laws are changing to make it more difficult to eliminate all your debt in a bankruptcy, so you may end up paying much of it back anyway. You even run the risk of having your wages garnished. It will also be on your credit report for 10 years! It’s much better to settle the debts if you can.
Credit Report Repair Myth #11:
There’s nothing I can do about it now. My credit is destroyed forever!
As long as you work, you can rebuild your credit. You’ll eventually get your debt and credit under control.
Rebuilding your credit means:
- Paying on time
- Looking for better credit options
- Learning more about debt and credit
- Removing outdated, inaccurate or misleading information from each report
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Thank you so much for this info. I think it would be helpful to many people.
No problem. I hope it helps..
Good article… Finally someone who knows what he is talking about. Going to repair my credit right now… what company shall I use?!
This is very helpful especially with our unstable economy right now. Not many people know what would be the effects on their credit report.
@Kathy, thank you. We try our best to give great information to our subscribers.
This is great info. Wish I knew this years ago. I have since repaired/restored my credit.
This is great info. Wish I knew this years ago. I have since repaired/restored my credit.