What NOT To Do When Repairing Your Credit Score
We indeed learn best from trial and error. But no one said that those trials and errors necessarily need to be our own. That is why we have compiled below the top 5 mistakes others most often make when trying to repair their credit.
The Basics of Repairing Your Credit Score
Credit repair is the process of correcting mistakes and errors on your credit reports. Removing these entries can raise your credit scores and give you back your buying power. Part of credit repair is implementing positive spending habits, as well. That means wise credit utilization, making payments on time, and other methods of adding “good” credit to your reports.
When it comes to successful credit repair, the devil is in the details. So, you need to be well-versed in federal consumer laws and not fall into traps laid out by lenders and collection agencies. Some people attempt to repair their credit on their own, while others use services of credit repair agencies with a proven track record.
Whether you decide to repair your credit on your own or with expert help, you need to know these 5 mistakes to avoid when repairing your credit.
Direct Communication with Debt Collectors
Buying a car or a house, getting approved for a loan, scoring a favorable interest rate – all of this depends on the credit score that bureaus calculate using the information in your credit reports.
So, repairing your credit can be an emotional journey and mission for you. And debt collectors know this. Whenever they contact you, the best thing to do is to let them know you don’t want to speak to them. Instead, ask them to send all their information and inquiries via postal mail.
The reason is simple – people working for collection and debt agencies are trained to ask questions that could validate your debt – and consequently impede that debt from being removed.
Agreeing to Things that Aren’t in Writing
This one goes hand-in-hand with the first mistake above. A big misstep is agreeing to anything when a collection agency calls you.
Again, refer them to your postal address. Not only do you lessen the chance of them validating the debt, but you also make sure that you have proof of correspondence with the agency. They will be on record for anything they send you.
Outgoing communication via postal mail is best because you can send letters to them and get delivery confirmation. That means you will have proof that the agency received the letter if they claim otherwise.
Filing Illegitimate Disputes
One of the first steps of legitimate credit repair methods is disputing items appearing on credit reports. But there’s a catch – you’re only on the right track if you’re disputing negative items that consist of inaccurate information. If you dispute positive accounts with longstanding history or negative ones that are rightfully on your report – you may be doing more damage than good.
Many credit repair agencies make money by sending out generic dispute letters that yield little-to-no results. That is because they did not thoroughly go through their client’s credit reports to approach the creditors effectively. Furthermore, they don’t customize their responses.
Thankfully, credit repair agencies with an alternative approach also exist. When they take on a case, they first assess their client’s reports and pinpoint negative entries that have a legitimate chance of being successfully removed.
There are other options, as well. You can wait for those items to come off your reports with time. Or, you could write a letter to your lender asking for a debt settlement. If they agree, the lender will remove the negative item.
Making Credit Card Balance Transfers
People make the mistake of thinking that transferring a balance from one credit card to another could help their case. They’re wrong. That move doesn’t change the fact that they still owe the same amount of money.
Moreover, the balance transfer fee may outweigh the interest advantage being offered (usually a promotional interest rate). So if you do this, not only is there no positive effect, there may be a negative effect on your balance.
The same goes for consolidating debt to just one credit card. And if you close your other credit cards, you will do even more damage because you will lose all the available credit history they would otherwise show.
This one sounds like a given, but you’d be surprised. Don’t put off your credit repair.
If you have a low credit score or believe there are wrongfully added entries in your reports, you should deal with the problem as soon as possible. While it’s true that most negative entries are erased from your reports after 7 years, surely you don’t want to put off your financial goals for so long?
Don’t want to navigate these murky waters of credit repair alone? Credit restoration agencies such as White, Jacobs and Associates employ expert credit analysts that use transparency, diligence, and alternative methods to assess your case and answer any questions you might have.