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4 Credit Repair Mistakes You Don’t Want to Make

Posted on January 3, 2011

When you are working to repair your credit, there are many steps to go through and factors to consider. IT can be easy to get lost in the shuffle and make some mistakes that actually hurt your credit repair work.

Here are some of the most common credit repair mistakes people make and how to avoid them:

Closing Your Accounts

When people are in credit card debt, it can be a gut reaction to cut up the cards and close down accounts to prevent further spending and debt. However, you could be putting yourself at risk for greater credit problems by taking that step. Part of your credit score involves how long you have had credit established. If you end up closing the accounts you have had opened for the longest period of time, you are risking a credit score drop by eliminating portions of your credit history. Instead of cutting up your credit cards for good, it is more appropriate to learn how to manage the credit you have. Pay off your balances and utilize the credit cards minimally. You can give your credit score a boost by charging small things to the cards regularly and paying off the bill each month. Keep the accounts open and somewhat active without overspending for the most benefits to your credit score.

Robbing Peter to Pay Paul

Another mistake consumers make when repairing their credit is using balance transfer cards to consolidate debts. While it can work for the best, consolidating credit card debt with another credit card can be detrimental to your credit score if you do not have a reasonable plan for repaying the full balance of the consolidated cards. If you still have a balance after the promotional period of the new card ends, you’ll find yourself paying significant finances charges. You also may not be able to consolidate all debts on your new card because of credit limits, leading to even more charges you have to pay each month.

Too Many Disputes

One of the steps to take to clear up a credit score is to review your credit reports for inaccurate information and file disputes for any information that is incorrect. Some consumers will try to dispute everything in the hopes that it will all be deleted from their accounts. However, credit reporting agencies are prone to catching on to the trick and can refuse to investigate what they believe to be frivolous disputes, leaving you back to square one. Dispute only inaccurate information and do so one at a time. Your dispute will get the attention it should and resolution is more likely.

Poor Follow Up

An essential component of repairing your credit is the follow up work involved. You may start off on the right foot with the best of intentions but fail to follow through on the process. When attempting to repair your credit, you have to rely on the actions of others to complete the process and there is no guarantee they will do their job without you following up. Make sure to send all correspondence via certified mail so you can track its whereabouts. Write down all pertinent information about the process of negotiating with creditors so you will have something to refer back to when necessary. If you are not making sure others are doing what you have requested, you can not be sure it has been done and that your credit will in fact improve because of your efforts.

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