Time to Read – 2 Minutes

There’s a lot of misinformation floating around about credit repair. Let’s clear the air and debunk some of the most common credit repair myths.

Myth 1: Credit Repair is Illegal
Some people believe that credit repair is a scam or illegal. This is false. Credit repair is a legal process that involves disputing inaccuracies on your credit report and working to improve your credit score through legitimate methods. In fact, you have the right, under the Fair Credit Reporting Act (FCRA), to dispute any incorrect or outdated information on your credit report.

Myth 2: You Can’t Remove Negative Items from Your Credit Report
Many people think that once a negative item is on your credit report, it’s there to stay. This is only partially true. While accurate negative information (like late payments) can stay on your report for up to seven years, incorrect or outdated information can and should be removed. Additionally, some creditors may be willing to remove certain negative marks as part of a debt settlement agreement.

Myth 3: Closing Credit Accounts Improves Your Score
A common misconception is that closing credit card accounts will boost your score. In reality, closing an account can actually lower your score by reducing your available credit and shortening the length of your credit history. It’s usually better to keep old accounts open, even if you’re not using them.

Myth 4: You Need to Hire a Credit Repair Company
While professional help can be beneficial, you don’t need to hire a credit repair company to fix your credit. You can dispute errors on your own by contacting the credit bureaus and submitting documentation. That being said, working with a reputable credit repair company can save you time and stress, especially if you’re dealing with multiple errors or complex issues.

Myth 5: Paying Off Collections Removes Them from Your Report
Paying off a collection account is a positive step, but it doesn’t automatically remove the collection from your credit report. The account will still remain, but it will be updated to show that it’s been paid. Over time, the impact of the collection will lessen, and your score may improve.

Debunking these myths is important for anyone looking to repair their credit. Armed with the right knowledge, you can take effective steps to improve your financial health.