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Credit Repair Misconceptions

Credit repair is something that many people don't understand. That lack of understanding can lead to a lot of problems and misconceptions. It is very important for people to take the time to learn about fixing credit before they do anything. Otherwise, they risk making mistakes and causing more problems than there were in the first place. To begin with, beware of credit monitoring companies. While they are convenient and not all of them are bad, there are plenty of ways that you can repair your credit on your own. You can get a free credit report from Equifax, Experian, and Trans Union to get you on the right track before considering credit repair services. One of the major benefits of improving your credit scores will help you qualify for the best home loan rates.

A common misconception about credit repair that people have is that they need fewer accounts. While you shouldn't be juggling 15 credit cards and home equity credit lines, more accounts actually shows that you are more creditworthy. You also shouldn't close accounts in an attempt to repair your credit. While it might seem like a good idea to get rid of debt, all that you need to get rid of is the revolving balance. Your account history length accounts for a large part of your score and you need to leave older accounts open with low or no balance to improve your score.

In some instances, credit monitoring companies charge a lot of money for something that you can do yourself, which is why you don't need them. You can fix your own credit, which is the most common misconception about credit repair. People assume that they need professional help to get back on track, which is definitely not the case. Another big misconception is that bankruptcy is an effective solution. In some cases, there is no other solution. However, many times it is actually a worse solution than fixing the credit yourself because it looks a lot worse than having some bad accounts.

Good credit trumps bad credit, right? Not always. In fact, if you have even one collection account that has been paid in full, it's still going to look a lot worse than your three credit cards that are current and have low balances look good. Most people never even see your report. A computer generated score tells them how worthy you are and even one late payment can be cause for denial with many approval systems. Educate yourself on the myths and misconceptions of credit repair so that you can successfully fix your credit and become a better borrower.

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