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Bad Credit Repair - Credit Repair Myths

Sep 26, 2008 Credit

Let’s define credit repair. The first thing you should know is that no company can legally remove negative information from your credit report that is correct. If is not a quick-fix scheme. The definition of legal credit repair is when you dispute or investigate information on your credit report that you believe is inaccurate or incomplete. During this investigation, the credit bureaus have 30 days to support their claims against you, and if the claims cannot be proven, the incorrect items must be deleted.

There are some myths out there that may deter you from making the right decision when it comes to choosing a credit repair service. We will take a look at five popular myths in depth:

Myth #1: Credit repair doesn’t work. Wrong. Credit repair does work and can be done very simply. If negative items on your credit report cannot be verified within 30 days of investigation and research, they must be removed from your report. So, it does pay off to examine your credit report closely because anything negative and inaccurate will affect your credit rating. By law, you have the right to request an investigation of any items you feel are incorrect and affecting your credit report negatively. You should take advantage of this.

Myth #2: You need a lawyer to do credit repair for you. Wrong. By law, you have the right to repair your credit report yourself. Credit repair attorneys and lawyers can cost you hundreds to thousands of dollars for steps that you can complete on your own for free, or with a credit repair service for a significantly smaller fee. When you are trying to improve your financial stability, you want to save as much money as you can, right? It is easy to dispute your credit report for a lesser cost than an attorney.

Myth #3: Credit repair and debt negotiation is the same thing. Wrong. Credit repair and debt negotiation are the same in that both of these practices can improve your credit score, but the methods are very different. Debt negotiation is the act of working with creditors to settle an outstanding debt, for a reduced amount. For example, if you owe a creditor $1000, you (or a professional debt negotiator) would negotiate with that creditor to get them to agree to take $400 instead of $1000 to settle the debt. If the creditor agrees, you pay the $400 (either in full or by making monthly payments) and the account is considered paid in full. The fact that the debt is no longer owed is what causes your credit scores to improve. Credit repair is different because you are working on the negative, inaccurate items that are on your report. The removal of such items is what can improve your credit score.

Myth #4: After you pay a debt, it disappears from your credit report. Wrong. When you pay off a debt, the amount owed has been settled. Your credit report, though, reflects payment history, charge-offs and collections account. These types of accounts can show on your report for up to 7 years, even if the debt has been paid.

Myth #5: You can not obtain your own credit report. Wrong. Your credit report is your information, your identity, and your financial future. It belongs to you. Therefore, access to your credit can easily be obtained. By law, you are entitled to access your credit report from each of the 3 credit bureaus (Equifax, TransUnion and Experian) once every 12 months at no cost to you. Plus, there are many websites out there where you can access your credit report as often you like for little cost per month. Either way, your credit report is totally accessible and you should not be afraid or intimidated about requesting it.

Whether you need credit report repair or debt negotiation, whether you choose to take it on yourself or hire a legitimate bad credit repair service to do the legwork for you, the steps and results will be the same. Negative and/or inaccurate information that cannot be verified will be removed and most times creditors will negotiate a lower settlement for your debt. Anything that can improve your credit score will only result in more approvals and lower rates on loans, mortgages, credit cards, and even insurance. The ability to enhance your creditworthiness is within your reach.

Ken S.

© 2008

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