Credit myths are common but you should be careful about what you listen to. When hearing information about credit, how do you know if it’s true? Almost every opportunity for financial security, success, and status is connected to your credit report.
At some point, you’ve probably heard myths about credit, the myths you heard can cause you serious credit problems and prevent you from having good credit.
Today I will point out some common credit myths and misconceptions about credit. Information that you most likely thought was facts but isn’t true.
Let’s talk about the 10 credit myths.
Credit Myth #1: If one credit bureau removes an account, the other bureaus will too
I wish this were the case, but it’s not. The credit reporting agencies are independent and do not jointly work as one company. Despite what some people think, they don’t work in unison to delete negative information from credit reports. Experian, Equifax, and TransUnion, known as “the big three” are actually in competition with each other. It’s unfortunate, but to correct or remove negative credit information, you must communicate with each credit bureau separately. The task of repairing credit can be daunting; that’s why so many consumers turn to credit repair companies for help.
Credit Myth #2: You should close accounts, too many will hurt your credit scores
There are a couple of reasons this myth is widespread. The age of the accounts on a credit report, impact fifteen percent of a credit score. The older the statement is, the more of a positive effect on the credit score. Also, your utilization ratio has a thirty percent impact on your credit score, so if you close accounts, it won’t help. It’s imperative to keep credit accounts open and active for the benefit of your credit score and profile. Potential lenders want to see consistency and stability when considering someone for credit.
Credit Myth #3: I can repair my credit, it’s not difficult to repair credit
You can call or write creditors to get inaccurate or harmful accounts removed from your credit report. Still, credit repair is not just submitting dispute letters. If credit repair were easy, more people would have good credit.
Credit repair is complicated and time-consuming. It takes patience, persistence, and understanding laws that govern the actions of credit agencies, creditors, and debt collectors. You can repair your credit, but like any skilled profession, you’ll need the knowledge and experience it takes to be successful.
Not all credit repair companies are the same, and the results may vary. Be selective when seeking help.
Credit Myth #4: Credit repair companies can guarantee results.
A credit repair company that guarantees results is violating the Credit Repair Organizations Act. This federal law was passed in 1996 to govern the actions of credit repair companies and protect consumers from companies that charge money and make false promises. Almost all credit repair companies that openly violate C.R.O.A. and make guarantee a specific outcome, typically lack experience or credibility.
It’s permissible for a credit repair company to offer a money-back guarantee or a performance guarantee as a layer of protection to potential clients.
Credit Myth #5: Certain types of negative accounts can’t be removed from a credit report.
People automatically assume that negative account information such as bankruptcies, repossessions, and foreclosures can’t be removed from credit reports. No item can’t be removed. If the item in question isn’t accurate, it isn’t verified or reporting within the allowable timeframe. According to the United States, Public Interest Research Group over 79% of credit reports contain errors, which would mean according to those statistics a very high percentage of negative accounts would fall into the category of being eligible to be legally removed. No credit repair company can guarantee the removal of negative information, beware of anyone who does ensure they can. But it would be best if you got an insight into the success rate of any company you’re considering hiring. Ask what their deletion rate is and check reviews and references.
Credit Myth #6: Negative accounts removed during credit repair will come back on your credit report.
This credit myth is a common one, but it’s not true. Any negative account that is removed from a credit report based on factual disputes can’t be re-inserted. New information would have to be discovered for the credit reporting agency to re-submit the account. In my 11 years as the owner of a credit repair company, out of thousands of clients, I’ve had only two clients have an account added back after being removed. In both cases, we had the negative account removed again, never placed back on. The credit reporting agency had violated the law, and we took the necessary steps to resolve the issue permanently.
Credit repair doesn’t decrease your score. The right credit repair company can help you get great results with your credit. The key is to find a company with a proven track record and excellent reputation.
Credit Myth #7: Paying off negative accounts like collections will remove it from your credit report.
It sounds logical but isn’t true. The credit reporting system is not and has never been valid. Most negative accounts stay on your credit report record for seven years. Bankruptcy will remain on your credit report for up to 10 years from the date filed.
Paid negative accounts can remain on your credit report for seven years after they’re paid. Activity on the account causes the seven-year time clock to reset and start again.
After you pay a negative account, creditors have no obligation to remove the negative information. After it’s settled, the account will report to your credit as a paid collection or charge off. This action will also harm your credit score, and you’ll see a decrease in your credit score.
Credit Myth #8: All credit repair companies are the same and get the same results
Because we know attorneys, dentists and contractors aren’t the same, it’s unfair to perpetuate the stereotype or myth that credit repair companies are the same. The skill level of one credit repair company could be far higher than the other, and they could have client results and reviews to prove that fact. Customer service can also vary from company to company.
Check out our report on how to choose a credit repair company. An excellent guide on what to look for when choosing a credit repair company. Most people have no clue about what to look for, and the cost is their number one deciding factor. Use the complimentary guide as a tool to help you avoid wasting time, money, and the possibility of making a bad situation worse.
Instructions: Hyperlink the “how to choose a credit repair company” free download to the highlighted “how to choose a credit repair company”.
Credit Myth #9: Negative accounts will remain on your credit for 7 or 10 years
Negative accounts don’t have to remain for 7 or 10 years. The Fair Credit Reporting Act states that information on your credit must report accurately, be verified, and report in the time guidelines or be removed. Even if the item in question belongs to you, it must be reporting accurately, be verifiable, and reporting within the allowable timeframe or it must be deleted. Most creditors are poor record keepers and the bureaus are notorious for reporting information inaccurately, so getting negative accounts removed is highly likely depending upon the experience level of the person or company disputing your accounts.
Credit Myth #10: When you get married, you have to apply for credit jointly
Although people have been led to believe that when you marry, your credit profile will merge, that’s wrong. Every individual has their credit profile that’s linked to their social security number. When you get married, your credit remains independent and separate from your spouse’s. If you apply jointly for a loan, the accounts you use will show on both of your credit reports.
When you jointly apply for credit, both you and your spouse are liable for the payments. If the account isn’t paid on time, it will damage the credit history of you and your spouse.
If you apply for credit cards, I would recommend keeping your credit separately. Don’t apply for a loan jointly if you can help it.
Credit is essential; it has a direct or indirect impact on almost every area of your life. Don’t believe everything you hear about credit, do your due diligence, use common sense, and trust your gut.
Use our blog and YouTube channel for information to help you repair your credit, raise your scores, or qualify for funding. If you have questions and want to have a private one on one conversation, let’s schedule time to talk.