6 Common Credit Repair Mistakes and How to Avoid Them

credit repair mistakes

Do you have bad credit and want to fix it? If you want to avoid making credit repair mistakes, this article is for you.

Having bad credit is a pain and it can put you at a major disadvantage in life. A low credit score means missing out on nice things and struggling more to get by.

Lack of good credit decreases the number of choices available to you. You’ll face limitations about everything from where you live, to where you can go on vacation.

Bad credit can even keep you stuck in a vicious cycle because it can affect your job prospects. People assume, fair or not, that you’re irresponsible or flaky, and they won’t hire you.

If an employment decision comes down to two identically qualified applicants, guess what? The one with better credit will probably get hired.

The sooner you can fix your bad credit, the better. Even a small improvement of a few tens of points can be beneficial.

The ideal FICO score may change a bit from time to time. But anything under 630 is thought to be terrible, and this cut-off point tends to stay the same.

Fixing your credit is possible, though. Here’s an overview of how to make it happen and avoid making credit repair mistakes.

1. Ignoring Your Bad Credit Situation

One of the worst credit repair mistakes you can make is skipping your annual credit check. This annual service was established by the Fair Credit Reporting Act, which passed in 1970. It’s free and intended to help you keep an eye on what the major credit bureaus are saying about your credit history.

Tolerating bad information on your credit record is like deliberately allowing yourself to be injured. And not checking credit reports is like hitting yourself on the head. It’s a ridiculous thing to do (or not do) because it doesn’t cost you a dime and you can do it in ten minutes over the internet.

Bad credit is as negative as having no credit at all. The good news is that you can take steps to get out from under a bad credit score, and never go back.

2. Not Talking to Creditors Directly

One of the worst credit repair mistakes you could ever make is to avoid talking to your creditors yourself. If you find that you’re starting to get behind on bills, pick up the phone and explain the situation as soon as you can.

Many companies are willing to work with people who fall behind. After all, they are staffed by humans who understand that sometimes unfortunate things can happen, beyond our control.

You can also send letters to your creditors and explain what’s going on. Most of the time, they will try to work something out. It’s important to send your mail certified, so you have proof of your communications.

If you don’t get the response you’re looking for, hiring a good credit repair company is a good option.

3. Getting Into More Debt and Worse Credit

Above all, don’t continue to grow your debt and rack up new late items on your credit report. Things like missing payments,

and running up more credit card debt can dig your pit of debt even deeper.  So can trigger too many new credit inquiries, so be careful when applying for new credit. Like renting an apartment, for example.

A good credit repair strategy is to use a budget. There are simple budgets you can use to stay in control. If you prioritize needs versus wants, you will run your finances and your credit will gradually get better.

4. Falling for a Scam Credit Repair Company

Watch out for credit repair scams! They’re everywhere, and they can invade your home through phone calls and mail. Responding to unexpected debt collector phone calls is a big no-no. Never make verbal agreements or admit to any debt over the phone.

Giving out your personal data before doing your due diligence is also a terrible idea because it’s impossible to know who’s really on the other end of the line. Never send payments for supposed debt without verifying the company or person you’re talking to is legit.

Likewise, if you’re asked to make a payment on old debt, it’s better to get advice from a professional credit repair service instead. Making a payment on an old debt can re-start the statute of limitations, so stop! If you mistakenly renew a charged-off debt, improving your credit score becomes more complicated.

For more information about what a credit repair service can do for you, schedule a free consultation.

5. Mishandling Your Credit Cards

Letting mistakes on your statement go without responding to them is never a good idea. That’s one of the first signs that your high credit score may be in jeopardy.

When you’re trying to repair your credit, cutting up your credit cards is actually not the best option. It’s better to keep them open and continue making regular payments.

Just don’t make credit card payments with other credit cards- this only runs up more debt and makes you pay more interest.

Something else to avoid is trying to apply for new cards, which can lower your FICO score.

Credit cards will get you in trouble faster than just about any other type of credit. Using credit cards is okay as long as you are smart about it, but it’s so easy to make mistakes. Be smart about them.

6. Failing to Take Proactive Steps

Trying to fix your credit without taking enough proactive steps is a great example of wishful thinking. Simple things can make a big difference.

For example, you can get a secured credit card that reports regular payments to the credit bureaus. There are also apps that you can link to your bank account, that report on regular payments you have to make, so you get credit for everyday activities.

Above all, don’t fail to ask for help when you need it. Fixing your credit can happen more quickly than you think. You may just need to hire an expert to fight for you.

Avoid Making These Common Credit Repair Mistakes

So now you have an idea of a few credit repair mistakes to avoid. Having good credit is so important that it’s worth the hard work and discipline required to make it happen.

For more information about setting up a credit repair strategy, you can follow, contact us today!

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