Avoid These 10 Common Credit Repair Mistakes

The FTC says that only time can fix a credit report… right next to their instructions on how to dispute inaccuracies. Does that seem contradictory to you?

Let’s face it. Credit repair works. The credit bureaus are among the wealthiest and most powerful corporations in the USA and they just don’t want you to know how to do it or else they’d lose millions defending themselves.

It’s easy to find 101 do it yourself credit repair guides on the internet and in the library.  Having read a majority of them myself, I can tell you with great certainty that a majority of credit repair “experts” have no clue what they’re talking about.  Some of their advice is downright illegal.

Here are some of the most common mistakes people make when trying to repair their own credit and some tips on how to avoid them.

  1. Using template letters.
    The credit bureaus aren’t stupid. They keep records of every dispute you make. When their system spots a template used on multiple occasions they are much more likely to mark that dispute as frivolous; since the odds are the person using it is either a fly-by-night credit repair company or an amateur. It will be much more difficult to make any further progress on your credit report once your account has been flagged. Use the template as a guide and then put it in your own words.
  2. Disputing out of sequence.
    When you dispute, in essence,  you are requesting the bureaus and your creditors prove their reports are accurate. If they fail to respond as outlined by the FCRA, and they continue to report inaccurately, then your ultimate recourse is a law suit. You won’t have a case if you don’t follow the proper procedures. A good rule of thumb is to dispute with the bureaus before challenging a creditor.
  3. Not validating with the creditor.
    Many consumers are too quick to pay off creditors and collection agents just to stop the harassing calls or in an effort to clean up their credit history. Before paying any past due debt, you have the right to request proof the debt is yours. You’d be surprised how often they fail to comply.
  4. Updating the statute of limitations.
    The statute of limitations is the period of time a creditor can sue for a balance owed. The time varies state by state, but begins on the date of your last payment or the first dunning letter was sent. Making ANY payment, even 20 years later, will cause the debt to update and become legally enforceable. Before making any payments be sure to research whether or not the debt is within the statute of limitations.
  5. Validating negative information.
    Another common rookie mistake is to validate negative information while trying to dispute the information being reported. The rule of thumb is the less you say the better. Make them prove themselves to you. The law is on your side.
  6. Not using certified mail.
    Credit repair is a legal process. Any lawyer will tell you it’s not what you know, but what you can prove that counts. According to the Fair Credit Reporting Act (FCRA) the credit bureaus, creditors, and collection agencies have 30 days to investigate and respond to your disputes. This is a major weapon in your arsenal because lenders maintain millions of records. It can be very difficult for them to produce the requested documents. Certified mail is your proof a request was sent that you can leverage for instant results. The best part? You don’t even need to go to the post office anymore. You can print your stamps from home.
  7. Not keeping copies of all correspondence
    Every letter you send and receive from a creditor or collection agent can be used to build your case. Never negotiate or accept offers unless they’re in writing.
  8. Closing old accounts.
    The age of your accounts, types of accounts, and amount of debt used make up a total of 55% of your credit score. When you close an account you remove that account from the equation. It’s much wiser to use your old cards once every 6 months to keep them active.
  9. Giving up too soon
    While you may get immediate results if you have evidence of wrong doing, you can still get good results if you’re persistent enough. For instance, most collection agencies will reply to a request for validation with a template letter. This letter violates the Fair Debt collections Practices Act (FDCPA). By following up you can leverage their violation into a deletion or a law suit.
  10. Not hiring a professional
    Credit repair may seem simple. As you can plainly see, it’s not. To get fast results far above anything you could ever do on your own without years of experience, trial and error, and maybe a heart attack, you might want to consider investing a few hundred dollars hiring a reputable service. Just make sure you don’t get ripped off.

 

About The Author

Brian Diez

Brian Diez is a nationally recognized credit expert. He has been quoted in the Wall Street Journal, Yahoo Finance, Dow Jones' Market Watch and Credit.com.