For the uninitiated, credit restoration refers to the process of improving one’s credit scores after something like bankruptcy or foreclosure has caused them to plummet into the less-than-stellar territory. Unfortunately, it can be difficult to get quality information about credit restoration from reliable sources due to misleading information and bad advice from companies that make money off of selling expensive credit restoration services. Today we’re going to look at some of the most common myths about credit restoration and explain why they just don’t hold water.
1.Credit bureaus have unlimited power
It’s no secret that credit bureaus have a lot of power when it comes to your financial life, but what you might not know is that they can be held liable for things like falsely reporting incorrect information, or purposely being slow in getting information updated on time. In other words, credit bureaus are like little angels to lenders; if something isn’t working as it should, take your complaint to a different level of authority and see if you can bring about change. If all else fails, you could always consider taking legal action against them through one of many class-action lawsuits that are active at any given time in America today — though doing so is by no means easy or cheap.
2.All your information goes into one report
Contrary to popular belief, debt settlement is a terrible idea for an average American trying to improve their credit score. Debt settlement companies are often little more than scams that take your money with no guarantee of any results or refund. With a little self-education and some patience, you’ll be able to handle your credit issues on your own in no time—and save yourself a ton of cash in the process!
3.Don’t hire an attorney right away
If you think it’s necessary to hire an attorney immediately after a black mark hits your credit report, there are some things you should know first: An attorney will probably cost thousands of dollars, even if they end up getting your case dismissed or withdrawn; and depending on how long ago your mistake happened, it may not be worth trying to repair your record anymore—especially if it’s been more than seven years since you made a major error on your report. As tempting as hiring an attorney is, follow these steps first. See if one of them helps resolve your issue before paying someone else to get involved in such a personal matter. Credit bureaus value customers that can prove their identity, so try one (or all) of these methods before jumping into action: Get a credit freeze: Credit freezes can help protect you from identity theft for about $10-$20 per bureau per year. It’s free at Equifax and TransUnion in certain states like Texas, Michigan, Connecticut, and California for everyone. Add additional security features to accounts: Many creditors offer additional features (like call centers) that add extra layers of security between yourself and fraudulent activity from happening again.
4.The debt settlement companies that call you are scammers
True, unless you want to give up your money for nothing in return. Instead of signing with a debt settlement company, consider trying to negotiate directly with your creditors—you might be surprised at how much they’re willing to knock off your balance when you offer to pay in full. If that sounds like too much effort, try calling them yourself instead of letting another company do it for you. Creditors would rather hear from you than have a third party call and haggle on your behalf, but even if they won’t cut you any deals face-to-face, being knowledgeable about what’s available and discussing your options will give you an advantage next time someone calls offering debt consolidation or credit repair services.
5.These companies want to take as much of your money as possible
A lot of these credit restoration companies are out to make a quick buck off your desperation for an easier life. They will promise you that they have a way of fixing your credit, but then only give you a short time to pay their exorbitant fees. If you do not pay those exorbitant fees, they will pull back on their service and ultimately leave you in your difficult situation with even less hope than before you hired them. The best thing to do is avoid any services like these altogether; instead, look into ways where other people have helped themselves by restoring their credit report and take advantage of that knowledge as well rather than paying someone else who has no incentive to help you whatsoever. These people could care less about helping you, only making money off of you. It’s more important than ever to check up on yourself and work hard towards getting ahead rather than fall victim to another person trying to profit from your misfortune. Be smart! Be safe!
6.There is no quick fix
- Get a copy of your credit report and score from each of three agencies (experts say at least). Look for errors or inaccuracies and dispute them with that agency’s bureau, says Consumer Action. Some mistakes can be easily fixed by you; for example, if someone stole your identity and opened an account in your name, contact creditors to let them know it were not you who opened that account.
- Don’t believe it when a company claims they will help with removing negative information from your report if you sign up today—it doesn’t work that way. It takes time.
- In general, don’t pay money upfront to get help repairing your credit. Credit repair companies must register with state authorities and follow their rules regarding fees and disclosures, but there are still rip-offs out there so take care when choosing a credit repair firm.
- If you’re offered debt consolidation to pay off multiple debts at one time using another loan—beware! You may be better off just paying more toward what you owe, Henderson says. Consolidation should always provide some sort of economic benefit.
- While no amount of credit repair is going to hurt your credit rating once you have paid all bills on time consistently, credit repair is only legal during the year leading up to a mortgage application.
- Keep copies of everything related to fixing any credit problems, including correspondence with creditors and proof that payments were made. This will help any future creditor or lender see you’ve been proactive about improving your financial situation by turning things around.
- Credit bureaus do make mistakes and if yours has, fight back to correct it. Many states require these credit bureaus to investigate disputes before taking action against you.
Take advantage of your rights under Fair Credit Reporting Act(FCRA) even if your dispute isn’t resolved immediately. That might mean writing letters directly to credit bureaus or even small claims court in extreme cases.
7.Here are some things you can do on your own
Verify your identity; Enroll in a credit-monitoring service and check your credit reports for inaccuracies; Shred old documents that contain personal information like Social Security numbers, bank account numbers, etc.; Freeze your credit reports at each of three major bureaus, which prevents potential creditors from gaining access to them without permission; Monitor your accounts for fraudulent charges and activity – contact any company immediately if you notice anything strange; Consider signing up for an individual security program (IPSP), like one offered by Experian or Equifax, or a similar service through TransUnion or Innovis Credit Union. These services monitor your account on an ongoing basis and provide another layer of protection against fraud. They have their drawbacks but are still worth considering. Once you’ve cleaned things up as much as possible, it’s time to address what happened.
