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5 Credit Repair Pitfalls To Avoid

By Janet Lacey
Published: Sunday, September 20th, 2009

If you are in a bad credit situation that you need to get out of, then you should get busy with credit repair. Credit repair, when carried out diligently in a proper manner, can help in greatly improving your credit scores and cleaning up your credit report. However, for the layperson, there are a lot of ambiguities about credit repair, which often make people indulge in credit repair tactics that adversely affect their credit even more. If you are planning to repair your credit, then the common pitfalls that you need to avoid are: 

  1. Not Getting Your Credit Report: You are authorized to one free credit report from each credit bureau in an year. Also, requesting your credit report from a bureau does not in any way affect your credit rating. Do not make the mistake of not getting your credit report at the earliest. And when you get your credit report, check it for discrepancies and start getting them corrected right away. 
  2. Disputing Everything On Your Credit Report: Many people will tell you that if you just write to the credit bureaus asking them to remove negative items they will do so. In some cases, where the credit bureau cannot verify some disputed information, they might just do it for the time being, but of course, if a negative entry is correct, then it will pop up somewhere or the other very soon. In order to clean up your credit report, dispute only those entries that are actually incorrect after due verification.  
  3. Sending Dispute Letters By Regular Mail: Credit bureaus receive thousands of dispute letters every week, and if you do not want your own entry to get lost, then make sure that you send it by certified mail with ‘return receipt requested’. This may cost you a little more, but can end up saving thousands once a negative entry is investigated and corrected. 
  4. Making Some Credit Card Payments While Missing Others: Many people think that they will pay off their highest interest credit cards first and then get down to paying the ones with lower interest rates. While this is a good credit repair policy, totally missing other payments in lieu of high APR ones is not. Not only will this further pull down your credit score, but by the time you get to paying the low interest cards, mounting interest rates and late fees will have turned them into high payment cards. A better way of repairing your credit is to make at least minimum payments on all cards while paying as much as possible above the minimum on the high interest ones. 
  5. Canceling Credit Card Accounts: Canceling old credit card accounts, instead of improving your credit score, will further pull it down.  If you are unable to control your credit card spending, it is a better idea to just give your cards to someone else to hold, like a trusted friend or family member in order to get rid of the indiscriminate spending habit. Do not cut up your cards, because you might even need them for credit repair from time to time.

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