Credit repair companies advertise that they can turn your credit around quickly and with little work on your part. While some credit repair agencies are reputable, many falsely advertise and mislead consumers into thinking they can fix it all for a fee. Before you hire a credit repair company, here are some reasons you shouldn't and tips to take care of your credit on your own.
No one can change negative information that has been reported correctly
If something is on your credit report because you did it, it can't be removed. Actual late payments, missed payments, bankruptcies, judgments, collections, and other negative information that is accurate has to just play its course. Most of that will not be gone for seven years or more regardless of what a credit repair company does.
The only thing a credit repair company can do to remove negative information is help you get rid of anything inaccurate. However, you can do that yourself for free! You just have to call or write the credit reporting bureaus to dispute it. According to the FTC, five percent of Americans have an error on their credit report. The credit reporting companies have an easy process in place to get things corrected without paying anyone to do it for you.
The only way to remove accurate negative information from your file is to wait until the item has expired
As I mentioned above, you can't take away accurate negative information until it expires. That takes a long time. Anything on an active account will be there as long as you have the account, so if the record is really bad, close the account to start the process.
- Late payments: 7 years
- Bankruptcies: 7 years for Chapter 13 bankruptcies and 10 years for Chapter 7 bankruptcies
- Foreclosures: 7 years
- Collections: 7 years, depending on the age of the debt being collected
- Public Record: 7 years. Unpaid tax liens remain for seven years after the payment is complete. Unpaid liens never expire.
You can repair your credit yourself for free by using sound credit practices
The only way to really fix your credit is doing everything right for the long haul. Make all of your payments on time and always pay at least the minimum. Keep credit card balances low. Make sure your accounts are open a long time to build a solid history.
There is no magic secret to a good credit score. I have gone through the dispute process to remove incorrect negative information from my report, I have never made a late payment, I pay off my credit cards in full each payday, and act responsibly when getting new credit and managing existing credit. If you do everything right for a long time, your score can only go up.
Understand what goes into your credit score
Make sure you understand how to fix your credit in the long term and know how your credit score is calculated. Also take advantage of the government program to get a free annual credit report (there is only one approved site to get it 100% free) and really free offers to get your credit score for free.
Questions on Credit?
Do you have any questions about fixing your credit score or credit report? I am happy to give you advice for free. Just send me a note through the contact form or in the comments below.
Image by StockMonkeys.com / flickr
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