Wouldn’t it be great if you could wipe away your bad credit? Clean slate. Start over fresh.
You can, but it takes time and effort.
There is no fix-quick scheme just like there is no get-rich-quick scheme. Those advertisements you see offering to instantly repair your credit…avoid them!
Those Promises to Wipe Away Your Bad Credit are Scams
According to the Federal Trade Commission (FTC), credit repair scams are on the rise. In fact, in late June, the FTC acted against a scam credit repair service that had stolen $6.2M from consumers. The digital marketplace makes it easy to set up phony identities and offer services whose purpose is to steal your social security number and sell it on the black market.
The FTC offers some immediate signs of a credit repair scam:
- You need to pay them first before they start working for you.
- They tell you not to communicate with your credit reporting agencies.
- They promise immediate results.
- They promise to remove negative information from your credit report.
- They advise you to dispute the information on your credit report, even when you know it is true.
- They tell you to provide false information when applying for a loan or credit card.
- They offer to provide you with a new identity, such as an EIN (Employer Identification Number) or CPN (Credit Privacy Number). They will tell you to use one of these numbers on all future applications for financing.
- They have a no-cancellation policy. And they refuse to advise you of your legal rights, which by law they are required to do.
You Cannot Wipe Away Your Bad Credit Overnight
Your bad credit didn’t happen overnight. There are many reasons why you might have a bad credit score. We’ve discussed them in previous posts: your credit utilization is too high, you are carrying big balances, you pay your bills late or miss payments, you defaulted on loans, you had to file for bankruptcy.
There is no way to wipe away your bad credit, but you can easily correct errors that may be causing your bad credit score.
The first step is to pull your credit report. This is something you should be doing on a routine basis. You are entitled to one free credit report per year, and there are 3 reporting agencies, so that’s 3 times a year you can pull your credit report to check for errors or indications of identity theft. Carefully examine everything that is included.
Disputing errors on your credit report does not cost you anything, and this is something you can easily do yourself. You don’t need to pay someone else to do it for you. Be prepared with countering information, put it all in writing with corresponding proofs, and do not be afraid to be vigorous in your appeal.
The credit reporting agency has 30 days within which to respond to your dispute. You will receive their response in writing. If they find the dispute to be accurate, they will also supply you with a new credit report reflecting the changes. If you recently applied for financing and were turned down due to the erroneous information on your credit report, you can ask the credit reporting agency to send letters to those providers alerting them of the changes made on your credit report.
What if the Negative Information is Accurate?
With a positive outlet, discipline, and grit, you can do the job of repairing your credit yourself.
Firstly, identify the reasons that your credit is bad. You’ll learn this from the report you received from the credit reporting agency.
- Was it due to your bill-paying history?
- Did you consistently pay late?
Make it a goal to pay your bills on time. Do you need help with this? Set up reminders, create a payment calendar for yourself or better yet, automate and use apps to pay your bills. You’ll never miss or be late.
- Are you over-extended?
A major chunk of your credit score is based on your credit utilization ratio. If you are maxed out on all your credit cards, plus have loans and a line of credit at the bank, your credit score will suffer.
Don’t apply for any new financing or credit cards. Utilize the next several months, or however long it takes, in paying off all your credit card balances. There are several ways to do this: begin with the highest-interest cards first or begin with the lowest balances first. You need to find a strategy that works best for you.
Prepare for a Better Future
Here is where you need to return to your reliable strategies:
- Track your money
- Save for emergencies
- Get rid of your debt.
If you have trouble figuring out how to manage your money and debts, there are legitimate consumer credit counseling agencies and professionals available. They will not wipe away your bad credit, but they can help you develop a plan that will help you be successful in repairing your credit and accessing financial freedom.
Those credit repair scams…they will not lead you to financial freedom.