Common Myths About Credit Repair
As important as credit is, there are a lot of people that don't
really know that much about credit and how it can be damaged or
repaired. A variety of different myths and misconceptions exist
in regards to credit and credit repair, and there are a lot of
people who don't even bother looking into the facts concerning
this topic until it is too late and their credit has been
damaged or worse.
Below you'll find some of the more common myths about credit
repair, as well as the factual information that goes with them.
Of course, before we get to that it's important that you
understand exactly what credit is and how it works.
What Credit Is
In order to understand why many credit myths aren't true, it's
important to understand exactly what credit is in the first
place. At its most basic, credit is a measure of how well you
have paid your loans and bills in the past. Positive experiences
cause creditors to send positive reports to credit bureaus, who
in turn add to your credit score; negative experiences and late
payments result in negative reports which subtract from your
credit score. The higher your credit score is, the better your
credit and the more likely lenders are to offer you good rates
on loans and credit lines.
Myth #1 - Credit Can Be Repaired Instantly There are a number of
credit repair scams that all offer you instant credit repair...
unfortunately, they can cause you a variety of problems and even
get you into legal trouble. These scams operate by obtaining a
new tax identification number for you, usually in a manner that
is legally reserved for businesses. This new number is a blank
slate credit-wise, but if you use it instead of your own
identification number you can be charged with fraud. Worse yet,
the scammer might steal your information for identity theft.
Myth #2 - You Can't Check Your Own Credit
Many people believe that you aren't allowed to check your own
credit, or if you are then it'll cost you. Many places actually
allow individuals to check their credit once per year (or more)
for free, so long as they do it through the appropriate
government agency. Some credit monitoring services also offer
free credit reports, though they require that you sign up for a
trial of their service in order to do so. If not cancelled
within the trial period, you will then be billed for their
credit monitoring service... which can cost more than the credit
report would.
Myth #3 - You Can't Fix Bad Credit With all of the advertisement
for credit repair services, there are still those who believe
that truly bad credit can't be repaired. At times it may seem
that way, but any credit can be repaired with time and careful
repayment of your debts. As old debts are paid off and newer
debts are paid on time, even the worst credit will slowly but
surely begin to improve.
Myth #4 - Bankruptcy Is an Easy Way Out Many people view
bankruptcy as an easy way out of debt, which is why the
penalties for filing bankruptcy are so strict. Bankruptcy should
be used as a last resort only, because it can lead to years of
garnished wages and not being able to use your credit. Even
after the bankruptcy has been discharged you might find it
nearly impossible to establish new lines of credit until years
later.
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