Unless you’re able to “live off the grid,” credit is an everyday part of your life. In fact, most of us wouldn’t be able to live decent lives without credit. We use credit almost daily when we buy something with a credit card. If you own your home, you probably have a mortgage. And chances are that you also have an auto loan, a personal loan or a personal line of credit. So it’s important that you know the seven deadly myths about credit.
- Credit bureaus must investigate any dispute you file within 30 days
- If you dispute information, it will be removed your credit report
- Credit repair firms have secret ways of fixing things
- If you pay off an old debt this will help your credit score
- You just can’t get errors removed from your credit reports
- It will help you get approved if I have a new credit identity
- Credit repair is never more than a scam
Here are the details regarding these myths.
When you file a dispute a credit bureau it must investigate it within 30 days
Yes, there is a federal law that requires the credit bureaus to investigate any disputes about errors on credit reports and then report the results of this investigation to you within 30 days. However, there is a loophole. Under the Fair Credit Reporting Act, these bureaus don’t have to look into any disputes that they consider being “frivolous or irrelevant.” This means they can look at your dispute and refuse to investigate it. However, if you do it right, as shown in this video, the odds are great that the bureau will investigate your claim and you could have it removed from your report.
If you dispute information, it will be removed your credit report
When you dispute a negative item, the credit bureau will not remove it from your report while investigating it. They will wait to hear back from whichever company provided the information. In the event the company does not respond in time, the credit bureau will probably remove the disputed information from your file. However, this does not necessarily mean that the creditor has removed the data from its own records. In this case, it could pop up again on your reports.
Credit repair firms have secret ways of fixing things
If you contact a credit repair firm it will claim that it has special industry knowledge and insights that could help you. You might be led to believe that there are holes in the law and that the credit repair firm knows how to take advantage of them and get things off your credit report. However, the big secret of credit repair is that you can get the same information free from reputable websites or your local library. For example, you could go to the FTC’s page on credit repair or get your credit reports free at www.annaulcreditreport.com. You could also go to Credit and get a free credit report card based on your Experian credit report, which will include personalized advice as to how you could improve your credit score.
Do you believe that if you pay off an old debt this will remove it from your credit report? Then you’re wrong. The fact is that if you zero out the balance on a past-due debt this may or may not help your credit score. If the debt appears as a collection account, how much you owe is usually irrelevant when it comes to your FICO scoring. So paying it off won’t help a great deal unless you can convince the collection agency to stop reporting the debt to the credit bureaus. And this is typically difficult to do.
You just can’t get errors removed from your credit reports
The reality is that it is possible to get errors removed. The FTC recently released a study that four out of five consumers who filed disputes with the credit reporting bureaus saw some adjustments to their credit reports. Today’s credit reporting system is so highly automated that it’s possible to get ignored or trapped in an endless loop of information being deleted and then reappearing. This means that the dispute process can be lengthy, time-consuming and frustrating. However, if you stay at it you can actually get erroneous information removed.
It will help me get approved if I have a new credit identity
If you contact a credit repair firm that says it can get you a fresh start with a new credit identity, understand that you’re dealing with con artist. These outfits may be selling stolen Social Security numbers or they may suggest that you get a Federal employer identification number (EIN) and use it instead of your Social Security number when you apply for credit. But regardless of which of these you choose, you’re committing fraud. For that matter, if you try to use someone else’s Social Security number you’re also committing identity theft. Plus, you can actually wind up with a completely blank credit history. You might find it harder to get credit if you have no credit history then if you have one with problems.
Credit repair is a scam
If you read about credit repair outfits, you’ve probably read a bunch of nasty things about them and have concluded they’re all scam artists. But that’s not always true. If you get your credit reports and try to read them, you could feel as if you were reading something written in a foreign language. You might get the gist of what’s in your reports but you may feel that you’re missing out on some important subtleties. In this case, a credit repair company might be helpful. However, you could actually educate yourself.
As an example of this, for $30 the Experian Credit Educator will give you a 20-minute, one-on-one phone call with an agent that will give you a detailed walk-through of your credit repair components and will offer insights for things you could do in the future to better manage your credit. Or you could go to a credit-counseling agency for help. Some of these will actually do credit report reviews. Finally, if you buy your FICO score at www.myfico.com for $19.95, you’ll also get a report that will explain the reasons behind your score and suggestions for improving it.