If you’re going to repair your credit, you’ll need to put aside any misconceptions about it first. There are several myths surrounding your credit score in particular. One of those myths is the belief that once you get a poor credit score, you’ll suffer financially and not much can be done to change it. The truth is that with credit repair it’s possible to get a higher credit score and better opportunities for more credit or loans in the future. Many also believe that if you apply for credit your score lowers drastically. But in fact the score only lowers slightly when you do this. Here are other common credit repair myths.
Will Paying off your debt help your credit?
Some people think that just because they paid off certain debts, their credit score or report will not suffer. Actually the opposite is true because although you paid the debts, they can remain on your report for at least seven years. And if you recently filed for bankruptcy, it will be ten years before you’re in the clear on your credit report. With that said, it’s still good to pay off outstanding debts because eventually they will be removed from your credit report.
You have heard that it is quite simple to dispute errors on your credit report. While it’s easy to write dispute letters and submit evidence that you paid debts to your creditors, the process could still be lengthy because the credit bureaus will need to verify the evidence and your claims to determine if errors were made. In addition, the credit bureaus are not always willing to cooperate with consumers regarding this issue.
If you decide to close out credit card accounts because you don’t use them anymore, don’t fall for the myth that this will boost your credit score. When you close out old accounts, you reduce your credit history and it will appear as if you barely have credit. This works against you and it causes a lower credit score. It’s better to leave those accounts open so that you’ll have the image of an established credit history.
For those who are opening new credit cards every few months, this is a black eye on your credit report because lenders will get suspicious and wonder if you’ll be able to pay down your current debts and the debt you’ll incur from the potential lender if you were approved for credit. By avoiding these myths, you can establish a better credit history.