6 myths about bad credit

Myth #1

When I pay a past due account, such as a canceled or collected account, it will show “paid” and will no longer be negative. It is virtually impossible to restore your credit without somehow satisfying your outstanding debts. However, the act of paying off a debt actually damages your credit. Negative credit is allowed to remain on the credit report for a maximum of seven years, except for bankruptcy, which can remain for up to ten years. This seven-year clock starts ticking on the “last activity date” or, in other words, when the last action took place on the account. Paying off an outstanding delinquent debt will change the status of the account to “collection paid”, “payment late” or “payment cancelled”, which will stand out as a very negative list. In addition, you will create a new last activity date on the day you settle the account. The seven year clock will reset and start over.

Myth #2

If I am able to remove a negative item, it will reappear on my credit report. The credit bureaus have cleverly spread this myth through the media and even government regulators. In fact, credit bureaus often temporarily remove a negative listing if they haven’t heard from the creditor after about thirty days. If the creditor reports late, say after six weeks, and verifies the negative listing, the credit bureau often reinserts the negative listing on the credit report. This is often known as a “soft delete.” Eventually, however, the creditor simply doesn’t respond and the negative list is permanently removed. If the item is verified by the credit grantor, either before thirty days or after, the account can still be disputed again at some point in the future.

Myth #3

There are some types of negative listings, like bankruptcies and foreclosures, that are impossible to remove from your credit report. There is no type of negative listing that has not been removed a thousand times from a credit report. Some types of negative listings, such as bankruptcy or bad debt, are certainly harder to remove from your credit report, but this has more to do with credit bureau operating systems than the severity of bad credit. article. For example, judgments and tax liens are severely negative listings, but they are easier negative listings to remove.

Myth #4

Disputing a credit report is easy and any consumer can do it for the price of a few postage stamps. Disputing the credit report is easy. Getting results from the credit bureaus is incredibly difficult, complex, and infuriating. It’s not a coincidence that the Federal Trade Commission receives more complaints against credit bureaus than any other type of business. Remember, the credit bureaus are primarily interested in protecting your profits. Investigating your challenge consumes these earnings. Aside from provoking a large number of lawsuits, the credit bureaus will do everything in their power to discourage consumers from moving forward with restoring their credit.

Myth #5

If I file for bankruptcy, I can start my credit report from scratch. Many bankruptcy attorneys do not adequately understand or explain the effects of bankruptcy to their clients. Simply put, bankruptcy is to credit rating what the nuclear bomb is to war. When you file for bankruptcy, each credit account you choose to include in bankruptcy will become a “listed in bankruptcy” account. In addition, a bankruptcy filing and bankruptcy discharge listing will appear in the court records section of your credit report. Because so many negative elements are attached to bankruptcy, it becomes very difficult to eliminate all traces of bad credit. If possible, you should avoid bankruptcy.

Myth #6

If you are not satisfied with the results of your credit bureau challenge, you can submit a “100 word statement” on your credit report explaining your side of the story. Creditors will read your statement and take it into consideration. No creditor, to our knowledge, considers the information provided in a 100 word statement. The statement only works for some of the negative listings on the credit report.