Avoid these ten common mistakes when trying to repair your credit. Many people commit these errors in the belief they’re doing well, only to find out they’ve set themselves back. It’s especially sad when all you were doing was trying to improve, but you ended up doing the opposite. So read on and learn what common mistakes to avoid.
1. Putting off repairing your credit
The most common and largest mistake is simply doing nothing to repair your credit. Even if most negative information will be removed from your credit report after seven years, that’s still a long time to live with bad credit and it does nothing to build up your good credit information.
2. Disputing every item on the credit report
A tactic commonly used by credit repair companies, this can backfire on you in two ways. There are two problems with trying to repair your credit this way. First, it’s not believable. If you dispute too many items, the credit bureaus could dismiss your dispute as frivolous. Second, you don’t want everything taken off your credit report. Some positive accounts are actually helping your credit rating and disputing them could cause your credit score to drop.
3. Hiring a scammy credit repair company.
Credit repair companies often make lofty promises that they can’t legally fulfill. You should be careful and watch out for red flags that mark a credit repair company that is just in it to make a quick buck.
4. Canceling credit cards.
It may seem like a good idea, but actually closing a credit card can be bad for your credit score. This is especially true if your credit card has balance, or if it’s an older credit card with a long history of payments on it. You’ll never improve your credit score by closing a card, and you may harm it, so think carefully before taking this step.
5. Transferring card balances.
Transferring credit card balances to avoid making a payment is only a game of financial hot potato. You’ll still be left holding it at the end. And with balance transfer fees that are added to your balance each time you transfer it, you end up with a larger amount to pay each time you pull this trick.
6. Cutting up your credit cards.
A lot of people who go through a period of bad credit decide to avoid using credit cards. But that makes it difficult to get new loans or other types of credit. Moreover, using a credit card wisely will help rebuild your credit, so it’s not a good idea to avoid them completely.
7. Missing some credit card payments in favor of others.
Missing payments is one of the worst things you can do to your credit. Credit bureaus will look at your payment history, and if they see you skipping payments, they’ll drop your score. Don’t miss one payment so you can pay more on another account. The only exceptions are accounts that have already been charged off or have gone to collections. If you have to choose between paying a collection account or paying an account that’s current, pick the account that’s current.
8. Sending letters through regular mail
When sending mail to credit bureaus, collection agencies, lenders, creditors, and other associated bodies, you should always send through certified mail with return receipt requested. This dated documentation can be invaluable. It gives you evidence that you did send mail and that the mail was received by the party in question.
9. Not having your credit report
The very first step in repairing your credit is acquiring and reviewing your credit report.With it, you can see exactly what items you need to tackle in order to move towards a good credit score. Without it, you’ll be going in blind without knowing what factors exactly are affecting you negatively, and thus what factors you need to address.
10. Filing for bankruptcy.
You must not use bankruptcy to repair your credit. Bankruptcy will not improve your credit at all – in fact, it can make it worse. Bankruptcy will remain on your credit report for 7 – 10 years, and its presence is decidedly negative, as you can imagine. You’ll continue having trouble getting credit cards and loans. Moreover, most lenders will ask if you’ve ever filed bankruptcy, so even after bankruptcy falls off your credit report, it can still prevent you from getting a loan.
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Posted on May 18, 2023