Helpful Do’s and Don’ts of Credit Repair
Repairing your credit repair can feel like trying to climb a mountain. You know how much better your financial life could be with a clean credit report, but the path to fixing errors and improving your score isn’t always straightforward. Worse, one wrong move can make things even harder.
The good news? By avoiding common pitfalls, you can take charge of your credit repair journey and set yourself up for success.
Here are six credit repair mistakes to avoid.
Ignoring Your Credit Report
You can’t fix your credit if you don’t know what’s wrong with it. Many people make the mistake of ignoring their credit reports altogether, assuming their score is out of their hands. This couldn’t be further from the truth!
Start by pulling your credit report from all three major credit bureaus – Equifax, Experian, and TransUnion. You can get free reports through AnnualCreditReport.com. Review them for inaccuracies, such as accounts you don’t recognize, incorrect balances, or duplicate listings.
If you find errors, dispute them promptly. Ignoring your credit report won’t make the problem go away, and inaccuracies could be dragging down your score unnecessarily.
Trying to Fix Everything at Once
When you see multiple errors on your credit report, it’s tempting to attack them all at once. But flooding the credit bureaus with disputes can backfire. Overloading their system may cause delays, and your claims could be flagged as frivolous.
Instead, prioritize the errors that have the biggest impact on your credit score. For example, incorrect late payments or accounts marked as delinquent are more significant than a slight balance discrepancy.
Addressing high-impact issues first can help you see results faster without overwhelming the process.
Falling for Credit Repair Scams
If a credit repair company promises to “erase bad credit” or “boost your score overnight,” run the other way. Scammers prey on people desperate to improve their credit, offering false hope and charging hefty fees for little to no results.
Under the Credit Repair Organizations Act (CROA), legitimate credit repair companies are prohibited from charging upfront fees or making guarantees about improving your score. Do your research before hiring anyone, and remember that you can dispute errors on your own for free.
Not Knowing Your Rights
The Fair Credit Reporting Act (FCRA) is your greatest ally in credit repair. It gives you the right to accurate information on your credit report and outlines the responsibilities of credit bureaus and creditors. Unfortunately, many people don’t realize how much power they have under this law.
For example, did you know that credit bureaus must investigate your disputes within 30 days? Or did you know that you’re entitled to damages if a creditor or bureau violates your rights?
If the process feels overwhelming, consider hiring an FCRA lawyer. Unlike credit repair companies, FCRA lawyers specialize in holding credit bureaus and creditors accountable for reporting errors. They can navigate the complexities of the law, handle disputes on your behalf, and even sue for damages if your rights are violated. Hiring a professional may cost more upfront, but it can save you time, stress, and money in the long run.
Closing Old Accounts
It might seem logical to close old accounts you no longer use, but doing so can hurt your credit score. Your credit history length plays a significant role in your score, and closing accounts can shorten that history. Additionally, closing accounts reduces your available credit, which increases your credit utilization ratio – a key factor in credit scoring.
If you’re tempted to close an account to simplify your finances, think twice. Instead, keep old accounts open and in good standing, even if you don’t use them regularly.
Paying Collections Without Negotiating
Paying off a collection account might seem like the right thing to do, but it doesn’t always improve your credit score. Once an account goes to collections, the damage to your score is already done. Paying it off won’t erase the negative impact unless you negotiate a “pay-for-delete” agreement with the collection agency.
In a pay-for-delete agreement, the collector agrees to remove the account from your credit report once it’s paid in full. Get this agreement in writing before making any payments. Without it, the account may remain on your report as a paid collection, which won’t boost your score as much as you might hope.
Make the Right Choices
If you don’t have any experience repairing credit – and most people don’t – you can easily go down the wrong path. There are so many different “hacks” and “strategies” out there that you can quickly find yourself making poor decisions. But for all of the misinformation and confusion, there are also some proven approaches that work.
The key to all of this is to understand which credit repair techniques work and which ones don’t. By partnering with the right professionals, you can figure out the best path forward.
