Four Credit Repair Mistakes to Avoid

Four Credit Repair Mistakes to Avoid

What’s The Most Important Score In Your Financial Life?

Arguably the most important score in someone’s financial life are the three numbers combined to make up their credit score. Most people don’t realize that their credit score is more important to businesses that are deciding whether or not to extend credit to them than the balance in their bank account. Additionally, credit scores are vital in the underwriting of life and health insurance, renting an apartment or house, or leasing a car…not to speak of getting loans, credit cards and bank lines of credit.

Credit Scores are taking a Dive

Before the financial meltdown and resulting recession credit was much easier to get than managing the debt that comes along with it. As a result, a growing number of people are finding they have a problem with their credit report and score. The appalling number of new bankruptcies and foreclosures each year is proof that credit problems are getting worse in our society. Many troubled with broken credit attempt to actively repair their credit. Here are the biggest mistakes to avoid when doing so.

Mistake Number 1

The biggest mistake is to totally ignore and not cope with bad credit reports at all in any way. Essentially this is not having an idea of what is contained within credit bureau reports or why a credit score isn’t good enough to get the desired credit amount on favorable terms. Start dealing with this by requesting a copy of your credit report from all three credit bureaus then examine them carefully. Confirm the accuracy of the information contained in them and also make sure the information is up to date. A good example of erroneous information having a negative impact on your credit score is if the balance of a credit card has been totally paid off but one or more of the credit bureau reports show that the account still has a balance outstanding.

Mistake Number 2

Another mistake that people wanting to repair credit make is not to challenge errors found on their credit reports once they have examined them. This reluctance exists with many people probably because disputing an error reported to the credit bureau seems intimidating. Yet, disputing a negative item incorrectly reported can be accomplished swiftly and easily when the correct procedure is followed.   Submitting disputes to negative items on credit reports should be done by writing and mailing a letter to the credit bureau carefully addressing the correspondence to the correct address and correct department rather than submitting it online on the bureau’s website or via e-mail. The reason for doing it in this manner is so that a hard copy of all communication received from or sent to the credit bureau can be filed. It is extremely important to attach copies to the letter of all documents making the case that the negative item in dispute is fact an error.

Mistake Number 3

The third mistake, and for many the most devastating, is not to protect their enormously important credit from identity theft. Disturbing reports from the U.S. Federal Trade Commission claim that there are nine million victims of identity theft crimes every year. This is one of the fastest rising white collar crimes.  Victims of this crime discover after their identity is stolen that thieves have used their Social Security number and other personal identity information to open credit and charge card accounts, get auto loans and even bank lines of credit or second mortgages without intending to pay them off. This often has a tremendously negative impact on their credit report and score. The first line of defense is to be extremely careful about revealing identity information. Next is to seriously contemplate utilizing a service to monitor daily credit report activity.

Another more extreme defense but one that does not require ongoing credit monitoring costs is to write to all three credit bureaus and ask for a freeze to be placed on your accounts. The drawback of placing a freeze on the account is that it will be harder to get new credit facilities because the credit bureaus will not make available to anybody your credit information without getting your permission first. However, the frozen status of your accounts will be one of the best ways guard your identity against thievery.

Mistake Number 4

Last of all, individuals who attempt to better their credit score often have unrealistic expectations. They always want a quick fix then become disheartened when results don’t come quickly and quit trying much too early. The chore of restoring a credit score should be thought of as more like a marathon race than a short, fast sprint. Quick fixes are normally not possible. A considerable increase in your credit score will take at least six months more likely one year. Negative items that can’t be disputed will stay on your credit report for up to seven years.