With all of the mis-information out there regarding credit repair; is there any wonder why certain myths continue to pop up? Believe it or not, there are ethical and legal ways to repair your credit.  All you need is to understand what is Fact and what is Fiction when it comes to removing collections, updating tradelines, requesting inquiries to be removed and many other options you have when working to repair or update your credit.

Here are my Top 3 Myths Credit Bureaus Work to Keep You Believing: 

Myth No. 1 - Paying off a past-due account (like a collection account or a charge off) will change your account to a “paid” status and it will no longer reflect negatively.  

It is nearly impossible to completely fix your credit unless you settle your unpaid debts. Aside from bankruptcy, which can appear on your credit report for up to ten years, negative items may be kept on your report for up to seven years. The date of last activity starts the 7 or 10-year time period.

As strange as it may sound, paying off a debt can have a negative impact on your credit rating.  Making a payment “resets” the clock because it is considered new activity. So if this item was two years old, when you make a payment on the collection, the two years are wiped away and you start at day one again. It appears to the credit scoring computer as an item that happened yesterday.

Read that again and let it sink in.  Paying a collection or charge-off will more than likely lower your score initially.  If you are contemplating a refinance or purchase, discuss paying off any derogatory debt with your loan officer before you proceed.

Myth No. 2 - It is against the law for creditors to remove a negative-listing on my credit record. Negative-listings are required by law to remain on the credit report for at least seven years.

When talking to collection agencies, credit grantor’s or the credit bureaus, keep in mind that you can expect to be given all kinds of quasi-legal drivel by people who are over worked and under trained. The law states that negative information must be removed after seven years.  It sets a maximum, but not a minimum.  The credit bureau can remove an item whenever it suits them.  The FTC is very specific about this and you can see their FAQ here.

Myth No. 3 - Bankruptcies, foreclosures and tax liens can never be taken off your credit report.

This one is definitely more challenging, but approached correctly, any negative listing can be removed.  That is why it is best to work with a professional.  They have the experience and know how to remove these items.  Please contact me if you need a recommendation on a reputable consumer credit restoration company.  The last thing you want to do is spend hundreds, maybe thousands of dollars on a company that’s only interested in taking your money — not the end result you desire!

Have you run into a myth that you want to share?  There are so many it’s difficult to keep up with all of them. We all benefit from the de-bunking of these myths!

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