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Now You Can Repair Bad Credit

Jan 11th 2011 at 6:46 PM

 

The importance of information in the credit report is never realized by most people until it is time for major purchases such as a car or home.  The impact of bad credit can be detrimental in determining if they get a loan or not.  It is possible that a borrower may get a loan with bad credit but the borrower's interest rate will be significantly higher.  Thus it is imperative that consumers can keep track of their credit report.  By law you can get a copy of your credit report once a year from each credit bureau.

Once you get your report, be sure to correct information that is inaccurate in the credit report.  There are many misgivings related to fixing bad credit.  I have listed top ten myths below.

Credit Repair isn't Legal.

An important purpose of the Federal Fair Credit Reporting Act is generally to ensure consumers have recourse in case their credit report contains incorrect information. By the same law the credit bureaus must take appropriate action within 30 days of consumer reports the erroneous information. The credit bureaus try their best to undermine the process, however it was their misdeeds that caused legislation to become passed to begin with. The Fair Credit Reporting Act is the best defense against them.

The credit bureaus are structured such that they make money when data is reported to them and when data is attained from them. Furthermore, they are certainly not necessarily accountable for having incorrect information because they are merely brokers for consumers’ credit information.

In a nutshell, it is your right to demand that your credit information be accurate. As long as you're looking to ensure that right results are in your report, your actions are legal.

I can easily fix my own credit.

Credit bureaus would like you to believe this since they know you cannot achieve the same results alone as you can with professional guidance. They may even present you with forms and web pages to use, but be assured, these are deliberately meant to be ineffective, because they don't would like you to fix your credit.

Disputing the credit report is easy. Getting results (and actually repairing bad credit) can be difficult, complex, and infuriating. The fact remains, you can try credit improvement without professional help. However, the majority of us are not aware of credit repair issues and how to resolve them effectively. Without guidance from professionals to repair bad credit, you are at credit bureaus’ mercy.

Credit repair doesn't work.

When you get in touch with creditors, collection agencies, or credit bureaus, their staff may tell you that all credit items must appear on your report for seven years. The truth is that negative listings cannot displayed on your credit report for longer than seven years (10 years for bankruptcies), however the creditor or the credit bureau can choose to delete the negative credit listing whenever they see fit.

You have to hire a credit repair service or lawyer to fix your credit.

Back in the days that attorneys were forbidden from advertising their services mainly because it was considered unprofessional. When that law was repealed, lawyers found dozens of new industries by which they could promote their services. Credit repair companies often employ attorneys to legitimize their efforts as well as justify their high fees.

Negative items can be "fixed" just by paying them off.

A lot of people think that paying off a collection or making a late payment current will magically fix their credit report. The fact remains that simply paying off a debt will not improve your credit score much, if at all.

Negative credit is allowed to remain on the credit report for a maximum of seven and one half years, excluding bankruptcy which could remain on the credit report for ten years. With the old Fair Credit Reporting Act (FCRA), the seven year clock began ticking on "the date of last activity" or, basically, when the last action took place on the account. Under the revised FCRA, the credit bureaus must start the seven year clock on the first payment that you simply missed that led to the collection or charge off status. Now, creditors and collection agencies aren't allowed to extend the reporting period by passing the account back and forth between collection agencies.

Usually credit repair agency will provide instructions on how to properly to pay off collections and delinquent accounts. Using that simple method, you can actually get your account updated to positive status as a condition of accepting your payment.

A few negative items on my credit report won't make any difference if I have enough good credit items.

Any amount of bad credit is devastating to your chances of being approved by a credit grantor. Most credit grantors never actually review your credit report. A computer pulls your credit report, rates your credit score, income, indebtedness, and stability, generates a number (your credit score,) then spits out an acceptance or denial.

Even two or three slow payments will most likely trigger a credit card or personal loan denial. The slightest number of negative credit may cause the interest on an auto loan to skyrocket. You will likely learn that even a little bad credit, it doesn't matter how much good credit you have, is an unacceptable barrier to credit approval.

Creditors including mortgage companies, automobile lenders and credit card companies reserve their best rates for those customers with very high credit scores. The rates and terms get worse as the credit score goes down.

The fewer negative items on your credit report, the higher your credit score. The higher your credit score, the more money you will save. Period.

There are several types of negative listings that are impossible to remove from the credit report.

There is no type of negative listing that hasn't been repaired and removed from a credit report thousands of times. Negative items, such as bankruptcy or unpaid debts, are certainly more difficult to repair and remove from the credit report, but this has more to do with the operational systems of the credit bureaus than with the seriousness of the bad credit item. For instance, judgments and tax liens are severely negative listings, yet are, overall, simpler to repair.

Consumer Credit Counseling Service or some other debt consolidation company can help me to repair my credit.

Consumer Credit Counseling Service or CCCS is a nonprofit debt counseling service that assists consumers who are over their heads in debt. It is important to know that CCCS (and companies like them) are funded and controlled by the credit grantors and the credit bureaus.

There are countless other companies that call themselves debt counselors, credit counselors, or debt consolidators. Many of these companies are officially non-profit, but don't let that fool you. Some of the wealthiest people in this industry run non-profit debt consolidation companies.

Debt consolidators can perform a beneficial service to the consumer. They can freeze late penalties, lower the interest rate, and consolidate all your credit card payments into one monthly bill. If you make your payments as scheduled, you can pay off all your debt in a few years, saving thousands of dollars.

But these companies make money from you (often, your first monthly payment goes to them, as well as a monthly payment) AND they make money from the creditors, who pay them to "manage" the collection of your account.

Because of the obvious allegiance these companies have with the credit bureaus, you can't reasonably expect them to do anything that the credit bureaus would frown upon, such as help you repair your credit.

In fact, if you opt to leave a debt consolidation program before you have finished it, they can list your failure to complete the process as a negative listing on your credit report.

The fact that you resorted to a debt counseling program alone is a red light for prospective credit grantors. Remember, paying off your debts is a step in the right direction, but it does not repair your credit.

If I succeed in deleting a negative item, it will just come right back on my credit report.

The credit bureaus have cleverly spread this myth through the news media and government agencies to discourage credit repair.

Under the new Fair Credit Reporting Act (FCRA), the credit bureaus are required to follow strict procedures to notify you if they decide to re-report an entry on your credit report. These new procedures have reduced the frequency of the re-reporting of listings, and they have increased the risk of lawsuit for the credit bureaus when they do it.

I can just get a new social security number or file bankruptcy and start over.

Using a new social security number to establish credit is against the law and may land you in jail. Don't think anything else you hear about this process. We've actually spoken to people who were convicted and sentenced. Just don't do it.

Many bankruptcy attorneys do not adequately understand or explain the effects of bankruptcy to their clients. Stated simply, bankruptcy is to the credit rating what the atomic bomb is to the battlefield.

In summary, recognize the fact that ultimately it is in your interest that your credit report reflects factual information.  Neither creditors nor credit bureaus are adversely affected by having erroneous information about you in your credit reports.  Now, you have law on your side to ensure creditors and credit bureaus comply in ensuring accurate information in your credit reports.

For more details and solutions, check out the link below:

http://empowerama.com/2011/01/09/10-myths-of-fixing-bad-credit.aspx

 

 

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