The truth about credit recovery | Credit.com

Credit recovery may seem like a complex concept at first glance. But that’s often because various misconceptions cloud the reality of the process and the potential for results.

The truth about credit repair is that it is not as complicated as you may have thought. And if you’ve read negative reviews about credit recovery, it’s important to note that the quality of your experience often equals the quality of the service provider you partner with.

These myths can be harmful if they eventually prevent someone from taking their bad credit as well improving their personal financial situation– especially if you are that person!

To help you, let’s take a look at the real truth about credit recovery and some of the most common misconceptions.

Truth: Credit repair is about your credit report, not score

This is a basic credit repair fact: The process is focused on your credit report, not your credit score. Believe it or not, your report and your score are two different thingsWhatever happens to your score is the result of actions taken to restore your report.

The most important thing to know here is that credit recovery aims to ensure that your report:

• 100% accurate.
• Fair.
• Fully substantiated.

That means the credit recovery process is more about going through your report with a fine-tooth comb to find inaccurate information and try to fix the situation.

Myth: Your credit score will rise immediately

Credit recovery is not a magic pill to your credit. While it’s a proven strategy for dealing with bad credit, it won’t immediately improve your credit rating. Typically, those who are dissatisfied with the results or the timeline of credit recovery look at their scores every day and expect them to increase.

A little patience is required with credit recovery; as with many other good things, the results come on time.

When an error or mistake is found in your credit report, the next step is to dispute the inaccurate negative item with a credit reporting agency. Once a dispute has been filed with a credit bureau, the reporting bureau has it 30 days, and in some cases 45 days to respond. It can correct or remove the negative item at the end of that time, but it will take a while for the impact on your credit score to show.

A general rule of thumb in credit recovery is that you can expect results that show up close six monthsSometimes it can take longer, especially if you dispute different aspects of your credit report.

In addition, there may be other elements to a bad credit score that may be holding you back that credit repair alone cannot fix. For awareness, the five factors of a credit score to be:

1. Payment history.
2. Use.
3. Account mix.
4. Hard investigations.
5. Age of accounts.

Truth: You can try to recover your credit yourself

DIY credit repair is possible without the help of an outside credit repair company. The process includes a few steps that consumers can complete themselves if they choose:

• Checking the credit report for errors.
• Disputing mistakes with a credit bureau.
• Take next steps to further analyze or build credit.

While you can do all of this yourself, the effort and time required is enormous. The actual mechanics of credit repair – like write a letter of dispute– can be time consuming and require expertise. Some may have the time and resources to get the job done on their own, but others may not reap such benefits. Or they may not have the experience of disputing major errors in credit reports.

Myth: Credit repair companies are scams

This is a particularly damaging myth given that the services of a reputable credit restoration company are invaluable to the process. The keyword in that sense is of course ‘renowned’. And there is an easy way to take the credit repair scam away from the rest of the market, which is largely made up of effective and reliable credit repair companies.

It is essential that you do some research on the credit repair companies you are considering working with and make sure that they follow the guidelines of the Credit Restoration Organizations Act (CROA). This consumer protection regulation “prohibits false or misleading representations and requires certain confirmatory disclosures when offering or selling credit repair services.”

There are a few key consumer protections that the CROA anchors:

• You cannot be asked for a prepayment before the company provides a service.
• You have the right to receive all contracts in writing.
• You have certain cancellation rights that the company must notify you of.

While the CROA regulates what credit repair services can and cannot do, you still have a role to play in researching which company is the best option.

Consider asking these questions:

• Does the company care about personal aspects of my story?
• Are they transparent about the process?
• Will they update me on progress and ask me to cooperate?

These answers will help you shape your final decision. Before you get there, though, start with our reviews of reputable, results-oriented services like Lexington Law and CreditRepair.com

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Finally, be wary of any company that offers you a result guarantee. This is a major credit repair red flag to watch out for, as well as an illegal practice.

Truth: Mistakes in credit reports are common

The reason credit repair can be so intensive is that errors in credit reports are quite common. A Federal Trade Commission study found 5% of Americans had a credit report error this can negatively affect their score.

Most consumers want to trust their credit report to be fair and accurate, and sometimes assume it. But credit reference agencies are not perfect and mistakes can slip through. Some mistakes are due to the creditor.

On a deeper level, inaccurate information from your credit report can be more difficult to see from the consumer’s perspective. For example, duplicate bills, incorrect questions, and inaccurate bills can all be on a credit report. Without addressing these errors, or even knowing they exist, consumers may not be able to build their credit no matter what they do themselves.

The experience of a reputable credit repair company can help spot these inconsistencies as they know what to look out for. CreditRepair.com reported that the average customer they worked with challenged 28 credit report items in 2018.

Myth: Credit recovery can get rid of the right negative items

That said, no amount of credit repair can lead to the removal of a correct negative item on your credit report. After all, the point of credit repair is to identify and dispute false or inaccurate information from your credit report.

Whether a particular item is substantiated and verified by the responsible credit bureau, then credit restoration is not the solution. Some get into the credit repair process with the expectation that it could be a panacea, even for negative items. If negative information is correct and affects your score, additional strategies such as debt validation may be required.

Truth: You Can Do More to Build Credit

Credit recovery is best exploited if you take action yourself to build credit. Do you remember those five factors that make up a credit score? Each of these are partially under your control as a consumer, and it may take some new lifestyle choices or spending habits to write a bad credit history. For example:

• Always pay on time. Set alarms on your personal devices if needed, circle dates in a kitchen calendar, or simply sign up for automatic payment. Many organizations also give a small discount for automatic invoice payment.
• Do not open too many new accounts at once or in a short time. This could work in a doubly negative way. Every account you open will have a tough question, while also lowering the average age of your accounts.
• Keep your credit usage around 30%. This refers to the amount of your credit balance that you use or owe. Getting too much of your credit can hurt your score and make it harder to pay off debt.

Looking for even more ideas? Check out some of our free, easy-to-use tips and tools

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The main truths to remember about credit recovery are that it is not a scam, it can improve your credit in time, and there are many services available to help you take control of your credit. In addition, these companies may be able to provide further credit analysis, next steps and credit monitoring to help you improve your situation.

Interested in learning more about the nuances of credit recovery and which companies have the best reputation to partner with? Visit our resource page for all things credit recovery for more information on the process and how to get in touch with effective and reliable services.

[Disclosure: Credit.com and CreditRepair.com are both owned by the same company, Progrexion Holdings Inc. John C. Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.]