It is difficult to navigate today's society with bad credit. Several companies use your credit to decide whether to do business with you and to set prices for the products and services you use.

Consumers with a bad credit history often seek credit repair to improve their credit and have an easier time financially. As you browse credit repair and evaluate the best option for your credit, here are the most important things to know about credit repair.

 

1. You can do it yourself.

While a reputable credit repair company may be an option for some people, there is nothing that a credit repair company can do for you that you cannot do for yourself. There is a lot of information available in books and on the Internet that you can use to learn how credit works and what you can do to repair your credit.

 

Removal of negative information, for example, can be done with techniques such as credit report disputes, debt validation, pay-for-removal, and letters of goodwill - strategies that credit repair companies use to remove negative information from your credit report.

Doing it yourself will not only save you money but will also give you power and control over your credit history. Once you know the credit repair tactics, you can use them at any time in the future if necessary.

2. Credit repair is about your credit report, not your credit score.

Your credit score is influenced by the information on your credit report.1 That's why checking your credit report is the first step in repairing your credit so you can identify the details that are hurting your credit score.

 

3. Your credit score helps you see where your credit is.

Viewing your credit score is useful in Credit Repair Newtown Square as a quick way to see if your credit is good, bad, or improving. A low credit score indicates a poor credit history that needs improvement. As your credit score improves, it is an indication that your credit history is improving.

Buying your credit score every time you want to see where you stand can be expensive. Using a free credit scoring service like Credit Karma or Credit Sesame will allow you to monitor your credit progress at no cost.

 

When you sign up for a credit monitoring service, look for one that doesn't ask for a credit card. Otherwise, there is a chance that you are signing up for a free trial subscription that will start charging you every month if you don't cancel services.

 

4. Removing accurate negative information is difficult.

Note the emphasis on precision. Credit bureaus are only legally required to remove inaccurate or unverifiable information from your credit report.

When accurately reported negative information damages your credit, it is more difficult to remove this information because the credit reporting agencies have the right to report this information. The integrity of the credit system depends on the credit bureaus reporting all accurate information, even negative information.

 

There are some strategies to remove accurate negative information, such as a collection account for a debt that you legitimately owe. These strategies can take more time and effort than a simple credit report dispute. For these types of accounts, debt validation (for collection agencies), pay to remove, and goodwill removal requests are the best options.

 

5. Doing nothing can be a strategy.

Negative information will not stay on your credit report forever. Most negative information will only stay on your credit report for seven years. There are some exceptions. Chapter 7 bankruptcy and unpaid tax liens can stay on your credit report for up to 10 years.

If an account is nearing the credit reporting time limit, waiting for it to drop can be less stressful and time-consuming than trying to delete the account with dispute letters or similar strategies.

Contrary to popular belief, taking action on a negative account does not extend the time limit on credit reports. So if you cancel a debt collection from six years ago, for example, your credit report will still be deleted after year seven.

6. Closing accounts will not help.

There is a widespread belief that only open accounts are included on a person's credit report, that closing an account will remove it from their credit report. Unfortunately, in some cases, closing an account can hurt your credit score.

Closing an account will not remove it from your credit report. All details about the closed account will continue to appear on your credit report as reported by your creditors.

"Before [closing accounts], consumers should consider other factors that comprise credit scores, such as how long the account has been opened," says Nancy Bistritz, Director of Public Relations and Communications for Global Consumer Solutions at Equifax, one of the three major credit bureaus. "If you've displayed the right types of behavior for a set time with an account (that is, paying on time every time), then closing that account may not make sense."

If the account is in good standing or you can get back in good standing by catching up on the balance owed, leaving the account open can help you repair your credit. You will need open and active accounts with a positive payment history to improve your credit score. Opening new accounts with a bad credit score can be difficult, so rehabbing your existing accounts can be much easier.

 

7. Credit repair companies are often not trustworthy.

Many credit repair companies make lofty promises, often promises they can't keep, charge up-front fees, and fail to deliver. All of these are prohibited by federal law, but consumers unfamiliar with the law won't realize they're being taken advantage of until it's too late.6

Over the past few years, the Federal Trade Commission has prosecuted dozens of credit repair companies for breaking the law. These companies are often required to pay heavy penalties, and in some cases, prohibited from doing business in the credit repair industry.

 

Some signs that you are dealing with a shady credit repair company: They ask you to pay upfront before any service begins, they cite an affiliation with the government or a special relationship with the credit bureaus, they promise a specific credit score, they promise to remove accurate information from your credit report, do not inform you of your right to dispute information directly with the credit bureaus, or ask you to waive your rights under the Credit Repair Organizations Act.

8. You cannot expect results overnight.

It takes time to rebuild bad credit history. Your credit score considers your most recent credit history more significantly than older items.

A good credit history generally has a minimal number of negative entries and a lot of recent positive credit information. A few months of on-time payments is a step in the right direction, but it won't give you great credit right away. As time passes and negative information disappears or ages, and you replace it with positive information, you will see your credit gradually improve.

 

9. Your improved credit won't last if you don't change your habits.

Many people go through credit repair, whether they do it themselves or hire a company, so they can borrow money, for example for a mortgage or car loan. There is nothing wrong with this.

If you want your good credit to last, you must adopt habits that maintain it. This means borrowing only what you can realistically afford. Paying your bills on time is perhaps one of the best things you can do for your credit.

Nancy Bistritz says, "When it comes to creditworthiness, a good rule of thumb to remember is to pay your bills on time.

or the weather. Lenders and creditors want to know that you have been able to meet your financial commitments on time at all times. Therefore, paying bills on time is an important and fundamental behavior that should be established early on.