When it comes to credit reporting, there are several popular myths that are often believed by consumers, but are never true. These myths are created and circulated by the credit bureaus to discourage consumers from attempting to repair or improve their credit ratings. By debunking the common myths of credit reporting, consumers can gain fresh insight into the world of credit reporting.
Myth #1: The information on a credit report cannot be changed.
Exactly the opposite is true. The Fair Credit Reporting Act requires that items be removed if they are not 100% accurate or cannot be verified within 30 to 45 days.
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Myth #2: When you pay off a delinquent account such as a charge-off or collection account, it will stop hurting your credit.
As hard as it might be to believe, sometimes paying off a debt can actually harm you. Most collection accounts are allowed to stay on your credit for a maximum of seven years. Paying them off without knowing what you're doing can unwittingly restart this clock.
Myth #3: Credit-reporting agencies are empowered with government authority.
Credit bureaus are like any other for-profit business. They exist for one reason: to make money, and no special authority exists.
Myth #4: Bankruptcy is a "freshstart."
There are several devastating effects of filing bankruptcy. Every account included in the bankruptcy will be so noted in your credit file. Additionally, there will be a court record generated that will also be added.
Myth #5: Some types of credit information (such as bankruptcies, judgments, and foreclosures) are impossible to remove.
Although it is true that some types of information can be more difficult than others to remove, each of these types of entries have been removed hundreds of thousands of times, using numerous methods.
Myth #6: Credit repair is too complicated for consumers. It is necessary to hire an attorney.
An attorney can help with clarifying the finer points of your state's laws and provide information about the possibility of filing a lawsuit. However, you can accomplish most if not all of the legal and negotiation-based methods yourself.
By debunking the myths of credit reporting, you can begin to take the steps needed to improve your credit, or to avoid damaging the credit you have. Take the initiative to learn how you can help to protect yourself from these common untruths.
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