Maybe you weren’t aware of this but there are so many falsehoods and untruths floating around the Internet that one couple actually developed a website just to dispute or validate them. It’s www.snopes.com and it’s the first place we go whenever we receive an email with information that’s either too good or too bad to be true. We figured out many years ago that there is not really a Nigerian prince who would give us $140 million. However, there are myths about credit floating around that at first blush would seem to be true – but are not. And here are six of them.
There are secret ways to fix credit that are known only by credit repair firms
If you’ve heard that there are firms that know loopholes in the law and about other secret things that can be done to repair your credit don’t believe it. While these companies love to promote the fact that they have special industry knowledge and insights, there isn’t really much they can do that you could not do on your own. The FTC (Federal Trade Commission) even has a page on credit repair. And you can get your three credit reports free at www.annualcreditreport.com or go to Experian.com and get personalized advice as to how to improve your credit.
You can’t get errors removed from your credit reports
If you haven’t seen your credit reports recently, you definitely should. You can get them one at a time or all three together at the site listed above – www.annualcreditreport.com or individually from the three credit reporting bureaus. You need to go over them carefully looking for errors that could be damaging your credit score. If you find one be sure to dispute it. While the three credit bureaus – Experian, Equifax and TransUnion – have online forms you could use to dispute errors, most experts feel it’s best to write a letter disputing the item, along with any documentation you have that would prove your claim. The credit bureau is required by law to contact the company that provided the information you’ve disputed and ask it to validate it. If that company cannot validate the information or does not respond to the credit bureau within 30 days, the bureau must remove it from your credit file.
If you dispute information it will be removed from your credit reports
The act of disputing information alone doesn’t mean it will be immediately removed from your credit reports. The credit bureau will investigate your claim but won’t remove the negative information while they’re doing this. They will wait to hear from the institution that supplied the information as to its accuracy. You should also be aware of the fact that if the creditor doesn’t remove the data from its records it can pop up back on your reports. This is another reason why it’s important to check your credit reports on a regular basis and to keep the paperwork you have that proves you’re right.
If you think that when you pay off an old debt this will remove it from your credit report, you need to think again. It’s just not true. Another fallacy is that if you reduce the balance on a past-due debt to zero this will improve your credit score. The fact of the matter is if that old debt shows up as a collection account, the amount of money you owed is usually irrelevant for FICO scoring purposes. This means that paying off an old debt that’s gone to collection won’t help unless you can convince the debt collection agency to stop reporting it. If you really want to improve your credit score, you should pay off your most recent defaults first and then see how much that improves your score.
Credit repair is always a fraud
You may have read a lot of bad things about credit repair outfits and many of them are true – some are rip-off artists. But not all of them. There are times when it does make sense to hire someone. For example just trying to read a credit report can seem as if you were reading something in a foreign language. You might get the gist of what the report says but may not feel you understand it completely and are missing out on something. If you are feeling this way, you might hire someone to help but there are also ways you could educate yourself. For example, Experian Credit Educator will give you a 20-minute, one-on-one phone call with an agent who will do a complete walk-through of your credit repair components for just $30. He or she will also provide insights that could help you make better credit management decisions in the future. You can also practice some do-it-yourself credit repair by disputing late payments as you will learn by watching this video.
If you dispute an item, credit bureaus must investigate it within 30 days
It’s true that the federal law mandates that credit bureaus investigate any complaint you make regarding an error on your credit report and then respond to you within 30 days. But, unfortunately, there is a loophole. The Fair Credit Reporting Act says that the credit bureaus don’t have to investigate any disputes that they feel are “frivolous or irrelevant.” This means they can review your dispute and then refuse to investigate. They can even do this based on the format of your letter. These agencies also often reject the techniques used by many of the credit repair firms such as using or disputing the same information over and over again. The best way to avoid the chance that your dispute will be discarded is by writing the letter of dispute yourself using your own words. And, of course, you should include copies of any relevant documents you have that support your position.