Thursday, November 13, 2008

5 Credit Myths

MYTH #1 “Credit Repair Services are fake”.

Although it is true that there are a great many untrustworthy credit repair agencies and services, there are also some bad apples in ever aspect of the business world. We just don’t label all members of these professions as “bad apples.”

If you are looking for services to help repair your bad credit you do need to be watchful and do some research when looking for the right credit repair service. The truth is there are only a hand full of trustworthy credit repair companies that are not “bad apples.”!

As mentioned, it is not always possible to fix your bad credit history to perfect status, so beware of any credit repair services claiming they can. Some credit repair services will be able to improve your overall credit score, just makes sure that they offer a money back guarantee if they fail to fix your credit.

MYTH #2 “Fixing your Credit Report yourself is too Complicated”.

The act of repairing your credit report is not as difficult as most might think, although as in every aspect of life it is always easier to pay someone else to do it for you such as a credit repair service. The idea is simple, write a letter to the credit bureaus or use their online dispute system.

Simple yet true, like everything else once you obtain the knowledge you are able to do things yourself with confidence. You will need to obtain a copy of your credit reports from all three major credit bureaus in order to examine and decide what needs to be done. As stated above your actions will involve disputing negative information on your credit report either through mail or the credit bureaus online dispute system.

Myth #3 - “Once I pay off a debt it will no longer be a negative mark on my credit report“.

This is one of the most common misconception about credit repair, once you pay off a negative debt on your credit report the credit bureaus will label you negative accounts as “Paid” or Paid to collections. This paid debt still has a negative affect on your credit score, the only real upsides to paying the debt off is one you feel better about yourself for paying your debts like a responsible member of society and two even though it is a negative mark on your credit report it is not as negative as it would be if you did not pay off the debt.

The thing to know is if your debt is 5-6 years old you should either dispute the negative information on your credit report or just simple leave it. Most debt such as credit card debt will be removed from your credit reports after a period of seven years so in turn it would be wiser for you to let it drop off if the debt is older than five to six years old.

Myth #4 - “Bankruptcy is my best option to repair my credit”.

Bankruptcy is not a good option when considering credit repair, once you go through the beankrupty process it will be a negative mark on your credit report for around ten years. So if you have outstanding debts on your credit report with the most recent one being four years old, after going through bankruptcy now you have added six years to your of negative points to your credit report.

Bankruptcy should only be used as a last resort for those who absolutely can not pay off their debts within a two to three year period. Other options would be applying for a cloan to consalidate your debt into one easy monthly payment, or you could simply negotiate with the credit grantor’s and collection agencies to lower your amount owed making it easier for you to make payments.

Myth #5 - “Inquiries and request on my credit report do not affect my credit score”.

This is a simple myth to answer, if you fill out an application to apply for a credit card, loan or any other credit the creditors will make an inquiry or in some cases such as auto dealerships they will make several inquiries to your credit report and this have a negative affect on your credit report. If on the other hand a company requests your information from your credit report on their own to say send out a pre-approval offer for a credit card then this has no affect on your credit report at all.

Understand that although credit inquires that you initiate do have negative impact on your credit report, it will be a minor one unless of course you go crazy and apply for every credit card you can find.

No comments: