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Bad Credit Repair Myths Dispelled

By: Jessica Acosta

Finance Myth 1: Bad credit repair organizations are scams.

Truth: Like any other industry, both legitimate and dishonest companies exist within the the bad credit repair industry. There certainly are bad credit repair companies that put you at risk for serious legal troubles because they use unlawful tactics in their efforts to repair your bad credit. Still others will simply take your money and fail to accomplish what you hired them to do. But, there are also honest bad credit repair organizations out there which conduct their business legitimately and lawfully. Anyone thinking of hiring a bad credit repair company should learn to spot the signs of a reputable agency, along with the indications of a less than desirable one. A common indicator of a dishonest bad credit company is exaggerated claims and promises. While bad credit repair absolutely can be done, it must be approached with realistic expectations in mind. Bad credit will not be repaired overnight, and it can never be guaranteed that all derogatory items on your credit report will be deleted. So if a bad credit repair company promises you perfect credit overnight, run, donít walk! Any such company is simply lying and is not to be trusted. Also, before choosing to hire a particular bad credit repair company, find out what methods they employ to repair bad credit. The only legitimate, lawful tactic to repair bad credit is to dispute negative items on a credit report in an effort to get them deleted. Steer clear of companies that use tactics such as issuing you a new social security company to use to apply for credit; as you might imagine this is a serious illegal offense and would land you in very hot water if you were to get caught. Another desirable characteristic to seek in a bad credit repair company is a money-back guarantee. Not all bad credit repair companies have one, and the ones that do may require that certain stipulations be met before they will refund you. If a bad credit repair company does not offer a money-back guarantee it doesnít necessarily mean they are not legitimate, but companies that do offer it have more incentive to make sure you are satisfied with their services.

Myth 2: Derogatory items that are correct cannot be deleted from your credit report.

Truth: It is no wonder that this is such a widely held misconception; many a consumer has called a credit bureau or credit regarding a negative item on his/her credit report, only to be told by the customer service representative that derogatory information cannot be removed. Sometimes they will take a step further and claim that "by law", negative items cannot be deleted. Who knows whether they say this because they are simply misinformed, or if they say it in an attempt to lead consumers to believe bad credit repair is impossible. Either way, it is simply not true. There is no law that demands that any entry, whether positive or negative, must appear or remain on a consumerís credit report. Credit bureaus and creditors place information on your report because they choose to do so, not because the law requires it. In fact, the only laws that have anything to say about what appears on your credit report, are the laws that were put in place to protect you as a consumer! These laws prohibit credit bureaus and creditors from placing on your credit report information which is false and/or cannot be verified or proven. It is these very laws that make bad credit repair possible.

Myth 3: In order to repair your bad credit, you must pay off your old charge-offs and collections accounts.

Truth: Strange as it may sound, making payments on old delinquent accounts can sometimes do more harm than good to your bad credit repair efforts. Here is why: Your most recent payment activity has a much more significant effect on your credit score than any delinquency that occurred several months or years prior. If your goal is to raise your credit score, it is usually wise not to pay debts that you have not made payment on in years. If you do, it will cause what was formerly an old delinquent account, to be updated on your credit report as a current delinquent account! This is usually very detrimental to your credit score. (Even if you completely pay off a debt that was in collections or charged-off status, it will still be listed on your credit report as a delinquent account. Making payments doesnít change that.) This doesnít mean you can or should ignore these items; they still have to be addressed and resolved. But simply making payment on them is usually not the way to do that if you are attempting bad credit repair.

We at Credit Repair and Debt Solutions are dedicated to providing helpful information to consumers struggling with bad credit repair and excessive debt.
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