With the wealth of misinformation available regarding managing your credit and debts, I thought we’d take a moment today to look at 5 of the biggest credit repair myths that we still hear to this day, and point out the real facts:
1: Amount of debt affects credit score.
“My credit should be easy to fix because the debt isn’t that much.”
Fact: It doesn’t matter if you have an outstanding bill for $5.00 or $50,000 – a collection is a collection, and the point damage is the same to your credit score. The only difference is that smaller debts are easier to pay off or settle, while larger debts take more time to get under control. We recently helped a client at Brotherhood Shirts with this very problem
2: Paid accounts should automatically be removed from your credit report.
“I need this removed because I paid it and it’s still showing on my credit report”.
Fact: Legally, you have the right to fair and accurate credit reporting. If you paid a collection off, it should technically report as “paid collection – zero balance”. That being said, if you feel something is wrong with the account as it’s being listed, you do have the right to dispute it.
Often times, since the creditor has already been paid, they ignore the dispute (since they have no incentive to dig up all the verification documents). If that’s the case, it will be removed from your credit report.
3: Divorce and Credit.
“I got a divorce and the judge ordered my ex to pay these bills. They shouldn’t be on my credit report anymore”
Fact: If your name is still on the credit line, you are still responsible for the account, regardless of what a judge rules. Here’s how it works: You made a deal with the lender. You agreed to pay any money you charge/borrow. It’s not the creditor’s fault the marriage didn’t work out.
4: They didn’t send me a bill.
“It’s not my fault. I moved and the creditor didn’t send the bill to the right address (even though I gave it to them) so it shouldn’t be on my credit report.”
Fact: Believe it or not, sending you a bill is a courtesy – not a requirement. At the end of the day it is your responsibility to know when your bills are due and to make sure the payments are made on time.
5: Collectors re-aging debts once paid.
“I heard if I pay this old collection off it will hurt my score because it will re-age the debt.”
Fact: Debt collectors do not re-age debts. Only original creditors can and even then it’s not something they make a habit of doing.
Conclusion. These are questions we hear literally upwards of 100 to 200 times a day. Consumers read some ill-informed article written by credit repair affiliates, or dispute mill credit repair companies and it keeps coming back to the same message.
If you want your credit repair efforts to be a success, you need to know the laws. Real credit repair is about more than that worn out “you have the right to dispute anything on your credit” crap that everyone else clings to like a security blanket; it’s about knowledge. That’s why we offer our personal credit coaching free with our credit repair clients.