Facts and Myths of Credit Repair

If your credit score is lower than you would like it to be, you may have been looking for ways to boost that number. There is some great advice out there. There is also some terrible advice out there. In this blog, we are going to break down some of the myths you may have heard about credit repair and replace them with facts you can use to boost your score.

Myth: You should not check your credit, because it counts as an inquiry that will negatively impact your credit score.

Fact: You should check your credit score. Each of the three credit reporting agencies is required to provide you with one free credit report per year. You can pull a report from one company every four months, resulting in continuous credit monitoring. If you get an adverse decision based on your credit, you are also entitled to a report. If your credit has been compromised, you may get free reports as a result of a breach. Finally, many credit card companies offer free reporting as part of your member benefits.

Myth: You should avoid collections calls or talking to your creditors if you fall behind on payments.

Fact: We have heard some people say that talking to your creditor verifies your debt. This is not true. Unless you can successfully show that you did not make a purchase, the debt is yours. Talking to your creditor is not going to make you more responsible for it. However, calling your creditor if you anticipate being unable to make your minimum payment or make your payment on time can help you. Many creditors will waive late fees and not report a payment as late if you have a good history as a customer. Creditors are also working with people who have been impacted by the pandemic.

Myth: Close your credit card account after you pay them off.

Fact: If you have gotten in over your head and had to struggle to pay off account balances, it can be tempting to close them afterwards. However, both the length of your credit history and your percentage of total utilization impact your credit score. To keep improving your credit score, do not close your credit card accounts.

Myth: Transferring credit card debt from one card to another is a good way to save interest.

Fact: This strategy works for some but is a trap for others. Most credit card transfers have an associated fee. This fee may be equal to the interest you would pay. Transferring to zero interest cards also encourages excessive spending because it makes it look like you have more money available than you do. You should be trying to pay off any credit card balances before you pay any interest OR transfer fees.