If you’re ready to repair your credit, you’ve already avoided the most damaging mistake of all – doing nothing about it. Yet, the best intentions do little good if you go about it the wrong way. Avoid these mistakes when repairing bad credit.
1) Not doing your homework.
Failing to study up on the credit repair process is a sure way to mess is up. So before you do anything else, familiarize yourself with the credit repair process. Our DIY credit repair guide and glossary of credit repair terms are good places to start.
2) Ignoring your credit reports.
You can’t fix your credit if you don’t know why it’s bad. Your credit reports will tell you that. Get yours once a year through AnnualCreditReport.com. You can also sign up for year-round access to your credit information via free credit monitoring sites.
3) Not disputing inaccuracies on your credit reports.
As intimidating as the process might feel, never shy away from disputing an error in your credit reports. The truth is, it’s not as hard as it might sound, especially with the free credit repair letter templates we have created for you to edit and use. Get the facts on credit disputes.
4) Submitting credit disputes online.
As you’ll soon discover, the credit bureaus prefer online disputes. Don’t do it. Go the old-school, snail mail route. Send your dispute letters (and supporting documentation) via certified mail with return receipt requested.
5) Not requesting debt validation from collection agencies.
Just because a collection agency says you owe debt, that’s no reason to pay it without question. Request validation of the debt before you pay them a dime.
6) Not checking the statute of limitations on debt in your state.
If the statute of limitations has passed, you are no longer legally obligated to pay the debt. That said, it could stay on your credit reports for up to 7 years, so you may want to pay the debt anyway. But at least you have the time you need to save up the money and negotiate a settlement for less than the full amount owed.
7) Not negotiating debt settlements.
The only thing that might sound more intimidating than credit repair is debt settlement. But you can – and should – try and negotiate for less than you owe on old debts. Here’s how.
8) Not keeping records.
You need a paper trail. Keep copies of all correspondence and, if you speak to anyone by phone, make note of the date, person you spoke with, and details of what was discussed. (And if someone promises something by phone, ask them to follow it up with written confirmation.)
9) Closing credit cards.
Yes, it’s a good way to avoid racking up a bunch of new debt. But closing your credit cards is also a good way to lower your available credit limit, which negatively affects your credit score. Unless you know you cannot resist maxing them out again, hold on to those credit cards.
10) Not using credit cards at all.
The more they contributed to your bad credit, the more hesitant you may be to use your credit cards today. But one of the best ways of rebuilding bad credit is to add positive credit history into the mix. Use your credit cards regularly, and make on-time, in-full payments. (The only exception is when you are working to pay a credit card off; wait to use it again until you have returned the balance to zero.)
11) Applying for too much new credit.
As helpful as new credit lines can be to a credit score, applying for too many of them is a red flag. Every credit inquiry not only gets listed on your credit reports, but counts against your credit score. So keep new credit applications to a minimum.
12) Paying an expensive company to repair your credit for you.
Yes, there are legitimate credit repair companies out there. But why not do it yourself and put all that money you save into paying down your debts instead?
Still not convinced you can repair your own credit? You need a pep talk: Yes you can DIY.
Tags: Credit Repair Mistakes