Repairing your credit can seem like a devastating thing, but it need not be the end of the world. You can, in fact, fix bad credit if you take the time and patience to do so. It is important, however, to do it right and avoid common pitfalls that can stall your recovery or even make the problem worse. Here are some important mistakes to avoid as you walk the road towards good credit once more.
Credit repair companies often take this tactic and it can cause you a lot of headache and heartache, as well as interfere with fixing your credit score. When you start disputing everything on your report as invalid, you can quickly finding your disputes dismissed as frivolous claims. In addition, do you know what happens if everything gets removed from your credit report? You have zero credit, which is as bad as (or worse than) bad credit. Only dispute those items that are legitimately incorrect.
Credit Repair Companies
Speaking of credit repair companies, these are also often a mistake. The FTC claims that it has never seen a legitimate repair company. These organizations make big promises that they can rarely keep and they often employ questionable tactics in pursuing those goals. Not to mention, you’re going to spend more money working with these companies, which is rarely a good thing when trying to clean up your credit.
Canceling Credit Accounts
Many people try to fix their credit by paying off, then canceling, cards. This can actually be a bad thing for your score. Canceling your account will at best have no effect on your score, so don’t drop it just because you want to fix your credit. You are better off to hold onto the cards and use them to make a small purchase once a month which you instantly pay off.
Skipping one card to focus on another is a bad idea. This will just cause your score to plummet in the end as the card you have skipped begins reporting bad debt to the major credit bureaus. There is only one exception to this rule: if a company has already sent you to collections, then you should prioritize open accounts over those in collections.
Bankruptcy can seem like a magic fix for your debt. It offers a clean slate and a chance to start over. What it does not do, however, is fix your credit. Wiping your debt in this way creates a black smear on your credit report that can stick around for up to ten years. During this ensuing decade you will have trouble getting new credit cards, new loans and can even have difficulty buying a house or car.
Bankruptcy is intended as a solution for those who are in debt way over their heads. What it never is, is a chance or means by which you can repair your credit.
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