Credit Repair & Myths About It
Many of us who are in debt can handle the responsibility of repaying our debts on time. Even for these people, they can run into a snag, and their good standing can become tarnished. For those of us who have had our credit score damaged by life’s events, there is a way to repair that damage with credit repair.
What is credit repair?
Credit repair is the process of repairing the damage done to your credit score. Damage done to your credit can include many life events or even identity theft. A credit repair service does not mean it will make your debt disappear in a day; it is the process of disputing issues that are tarnishing your credit report.
The breakdown of credit repair
Most of the time a credit repair service is needed to clean up our credit report. It involves something as simple as disputing an error. Sometimes, though, it consists of the need for a professional credit repair service. These companies have sprung up. Many of the services and methods used by these companies can are questionable. However, there are legitimate service companies out there that will repair your credit score. To find a genuine company might take you doing your homework.
How does credit repair work?
There are several companies out there that claim to repair your credit. These companies do not remove any negative items from your credit report. What they do is dispute all negative items on your credit reports. Consumers in the US are entitled to free reports from each of the credit reporting agencies every year. Also, if you are denied credit for reasons involving negative items in your credit reports, you are entitled to a free report from that credit reporting agency.
When repairing your credit, the agency you employ will file disputes of your behalf. These disputes will involve all negative items in your reports. These harmful and inaccurate items might be present because your identity was stolen or because you could not pay your bills on time.
Some things affect our credit score and measures we can take to improve our credit score without the need of hiring a credit repairing agency. These measures involve the utilization of our available credit. When we are using all our available credit, it can hurt our credit score. The person with the credit should take the first step in credit repair. Our moves to repair our credit come from using less credit than is available to us.
Does credit repair offer debt relief?
There are debt relief programs out there. These programs offer credit card debt relief. How they work is that negotiations are made on behalf of the consumer. The debt relief agency will take all your credit cards and other debts and negotiate with your creditors. They will then offer these credit cards and other unsecured debts a settlement.
When you are looking for credit card relief, you can find it with a debt settlement program. These debt settlement programs offer you credit card debt relief by negotiating simpler terms with credit card companies. These terms will give you relief from all outstanding unsecured debts.
Credit card debt relief is an excellent option to make before employing the services of a credit repair company. It is important to remember we must find credit card relief before credit repair will have a lasting effect on our reports. Credit card relief and credit repair do not go hand in hand.
Myths about credit repairing
There are many myths about repairing our credit. Some of these myths are true, but many of them are false. We have selected 4 of the most common myths for this article Read on to discover them.
Opening lines of credit will increase your credit score
Opening lines of credit might seem like a good idea at first. But too many lines of credit might signal to the creditors you are trying to obtain that you are attempting to over-extend yourself. When we attempt to over-extend ourselves, it can hurt our score.
Besides that, every time we apply for credit, the company will make an official inquiry into our credit report. That official inquiry will remain on your credit report for two years and it will impact your score for those two years. It is best to research the types of credit that can be extended to you.
Researching the credit that you are eligible for is best because you will not have too many inquiries on your credit reports. Also, it might be wise not to have too many accounts. We might appear as though we overspend. It will do more harm than good to look like you are an overspender.
If I close credit accounts, I can increase my score
Closing your accounts will not necessarily improve your credit score. The reason is that your credit score is in part, determined by how you handle credit. If you close your accounts, there is no way for this part of your credit score to be generated.
Sometimes, though, it is impossible to avoid close some of your accounts. Like, for instance, if you are working with a credit repair agency to negotiate your bills, the credit card company may ask that you close your account after it is paid off. It is, however, more beneficial to leave them open.
You might want to consider paying off your credit cards and utilizing only 1 of the cards but leave the rest of them open. Also, something to consider is to get a new credit card and transfer all your balances to it. If you pay off the transfer balances during the introductory zero interest on balance transfer offer, you will save yourself some money. You should keep those cards you transferred the balances from open and not use them.
Removing negative items from my reports will increase my score
That is true. If you remove negative items from your credit report, it will increase your score. Some services can help remove negative items from your credit reports. These services often dispute the account in a variety of ways. Repairing your credit with the right company can be accomplished in as little as three months.
Many will tell you it is not legal to work with an agency to repair your credit. It is legal, though, many agencies will work with the credit reporting agency to get negative items removed from your report. These agencies are working within the laws regarding the Fair Credit Reporting Act. You do, however, need to be aware and have reservations about some of these companies.
Some companies will take your money and not making progress on your credit reports as they have promised. It is best to do your research before employing an agency that claims they can fix your credit. The way to do so is to conduct an internet search and read reviews from other customers of these companies.
If I pay off my loans, my credit score will have a boost
That is not necessarily true. Some of us get the idea that installment loans, student debt, mortgage, and car loans, have an impact when we pay them down early. In reality, the credit bureaus do not care if you pay on an installment loan early. That is not what impacts our score.
What impacts our score more is how and when we pay down our revolving credit. When we pay on our credit cards, we are showing we do not overspend. We can build a positive credit history with a nice score by paying all or most of our credit card debt before the billing cycle ends. That means we should pay on our credit cards before the due date every month.
For instance, if our credit card billing cycle is on the fifteenth of every month, we should pay on our card by the fourteenth of every month. Paying on revolving credit will give our score an immediate boost. We can enjoy a boost month after month if we get in the habit of paying on this type of credit before the billing cycle ends.
In conclusion, this article discussed many things. We discussed ways to repair our credit. Also discussed were myths about repairing our credit. Touched on was what is meant by credit repairing agencies, what they do, and how they do it. We wrapped up our discussion on some of the myths surrounding credit repair. Finally, we finished with a debate about what does and does not improve your credit score.