The 10 Biggest Credit Repair Myths

Hey, credit heroes, when is a myth not a myth? Well, it's when you think it's the truth. That's why today I'm going to correct a whole lot of financial misinformation, urban legends and fake news by debunking the top 10 credit repair myths. So you better stick around.

My name is Daniel Rosen, and welcome to Credit Repair Business Secrets.

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Okay, let's get into this. Mark Twain once said, a lie can travel halfway around the world before the truth puts on its shoes. Only he didn't say that. It turns out the Internet is wrong. It's wrong a lot. And if you search for that quote, you're going to find it attributed to dozens of other famous people. See, the truth is so difficult to come by that there's even an Internet law called Cunningham's Law, which states that the best way to get the right answer on the Internet is not to ask a question, it's to post the wrong answer and you'll be corrected. And that law is named after Ward Cunningham, who is the inventor of Wikipedia. And unfortunately, he's right. Every day we're flooded with incorrect information, and it makes educating people about financial issues way more difficult because they first have to unlearn what they already think they know. So we need to debunk all the bad word of mouth advice and tell people the realities of credit repair. So how does this relate to us? Well, there are so many myths about credit repair that it was very hard to trim this list down to just 10. So here are a few honorable mentions before we get to our top 10. No, a perfect credit score doesn't matter. You just need a score within a specific range to convince lenders that you are credit worthy. The higher your credit score is, the better. But there are no additional products or benefits for having a perfect score. And yes, good debt is a real thing. If you weigh your options and decide that borrowing a reasonable amount of money is a smart financial decision, like investing in yourself and in future success through education or equipment, that's an example of a good debt. And if you make the payments regularly and on time, it will improve your credit score. And no, bankruptcy is not a get out of debt free card. It's an emergency parachute. Bankruptcy is a huge negative mark that stays on your credit report for up to 10 years and it should only be done after you consult with a financial advisor or a lawyer. And yes, young people need to pay attention to their credit. The length of your credit history is a factor in your score and the minimum age that you can apply for credit is 18. So financial experts recommend that people start building credit as soon as possible. Here's the thing to remember. Some of these myths are created accidentally, like a game of telephone and and some are holdovers from something that used to be accurate, but times have changed and some are the result of intentionally withholding information so that people stay confused and discouraged from pursuing financial education. Here's why this is important. We need to do the work of not only speaking the truth, but also dispelling lies, rumors and falsehoods. And I can tell you from experience that one financial error can have extreme and lasting effect on your life. In my case, one bank error not only ruined my life, but it completely changed the course of my life and it even changed my profession. So I'm very sensitive to errors and misinformation around credit. So without further delay, here are the top 10 credit repair myths and debunked myth one. The credit bureaus are part of the US government. Well, that's not true. The word bureau. It tricks people into believing that Equifax, Transunion, and Experian are part of the government or some kind of nonprofit organization when they are not. In fact, they are for profit publicly traded companies that make their money by selling your information and partnering with banks to justify charging you higher fees. And to them, you're not a citizen that needs to be protected. No, you are a number. You are a revenue stream. Your income and education impact your credit score. Well, your credit scores are just measures of risk whether you pay your bills on time and in full. A rich person who doesn't pay their bills can have a bad score and a poor person who does pay their bills can have a great score. Your demographic information doesn't appear on your credit report, so it doesn't influence your credit scores at all. Your education, your salary, and how much money you have in the bank are not factored in. The amount of debt you have matters. Okay. Neither the size of your debt nor the debt to income ratio directly affect your credit score. What matters here is the amount of debt versus the amount of available credit you have. And for that reason, you'll want to check your credit reports often to make sure that they are reporting the correct credit limits on all of your accounts. Myth number four Renting hurts your credit. Well, renting does not hurt your credit. And the industry is quickly changing so that paying your rent every month can actually help your credit. Several key companies, Experian and Mastercard, have already released programs and apps that count monthly rental payments towards building your credit score. So that is awesome. Using a debit card improves your credit. Okay, Debt cards are not a form of credit, so their activity is not reported to the credit bureaus. They do not affect your credit history, they do not show up on your credit report, and they do not affect your credit score. It's the same thing as if you made a purchase with a prepaid card or with cash. But I do believe that if you have a credit card addiction like I had, and serious credit card debt like I had, the only way to cure it is to switch to only using a debit card. That's what I did. And by changing my patterns and slowly chipping away at the debt, my score began to rise. So for that reason, I still don't use personal credit cards ever. I really do think they are evil. Paying off an overdue debt removes it from your report. No, Paying off old debt does not erase its negative mark on your report or or lower the impact of the late payment. These items can stay on your credit report for up to seven years. Now, one way you can attempt to speed up the process is to contact the debt collecting agency first before you pay off the past due debt to negotiate that the item be deleted from your report in exchange for a partial or full payment of the outstanding debt. Myth number seven Closing a credit card improves your credit score. Okay, no and no. Closing a credit card, it never improves your credit score. In fact, it's the opposite. It usually lowers it. Closing a credit card account can shorten your overall credit history and it can increase your credit utilization and both of these will negatively impact your score. Like I said earlier, I never use credit cards, but I never close the accounts. So on my credit reports, it looks like I've had them open for decades. Myth number 8 Marriage and divorce affect your score okay, when you get married, you share everything except credit reports. Each person in that marriage has their own credit report. When it comes to applying for credit with your partner, like applying for a mortgage together, will each person score is taken into consideration by the lenders even if you have shared accounts. Now, divorce is similar in that it doesn't directly impact your credit score. However, divorce does often ruin people's credit, but that's because of the circumstances related to the divorce and not the divorce itself. If you are both financially responsible people and you have similar credit scores and histories, you shouldn't expect to see a change in your reports. But if you were married to someone who was financially irresponsible and you had a joint account, their charges and unpaid bills will affect your credit. Divorce is an emotional time, but credit needs to be a priority to make sure that lasting damage isn't done to either person's finances. Myth number nine Checking your score hurts your score. Okay, this is probably the most common myth. Every American is entitled to a free annual credit report, but that free report doesn't contain scores. Checking your own scores and your reports on a monthly basis with a credit monitoring account, that is a really good idea and it will never affect your score. However, applying for new credit like a credit card, a car loan, or a mortgage that requires a hard pull, which will always cause a ding to your credit score. Myth number 10 credit reports are accurate. Okay, errors on credit reports are way more common than people realize. Nearly 8 out of 10 people have errors on their credit reports and most don't even know it. A single piece of inaccurate or outdated information on a credit report can keep you from getting approved and can affect the terms and interest rates and and they can cost you a whole lot of money. These errors can ruin lives, so they need to be found and fixed. And that's why it's very important to check your reports and scores on a monthly basis. At this point, it should be really clear why consumers need to educate themselves and why credit repair specialists need to inform their clients about these myths. Myths might be fun entertainment, but we all need a healthy dose of reality when it comes to financial empowerment. And just a reminder, this podcast is.

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Seven day trial for only $1. Sign up right now at creditheroscore.com and now for my favorite part of the episode. Each week I'm featuring one of our credit heroes inside our credit repair cloud Facebook community so that you can see firsthand what real people are doing as they run and grow their business. And today's spotlight is on Michelle C. And it's actually a different Michelle C. Than last episode. What are the odds? Okay, so I noticed that Michelle left a comment a few days ago in the community and it struck a chord with me. She posted a video that showed one of her clients having all three credit scores boosted by 24 points or more. And Michelle wrote, I just wanted to share with you guys one of my clients recent results. I mean I originally started my credit business in 2018, got burnt out, took a couple years break, now relaunched and have helped over 10 plus people in the last 60 days. So blessed for this group. It's okay to take a break, just never give up. And Michelle, I know exactly what you mean. Sometimes life can burn you out and sometimes you feel like you don't have anything left, but all you really need to do is recharge. But you never gave up. So thank you for being amazing. And I'll end by saying if you don't already have a credit repair cloud account, check it out. It's the software that most credit repair businesses in America run on. Just sign up for a 30 day free trial at creditrepaircloud.com freetrial. And if you'd like to change lives and grow your own credit repair business, check out our Credit Hero Challenge. It's a live experience that has helped tons of credit heroes to get certified in disputing and to gain confidence as they run their credit repair business on a solid foundation so they can change a whole lot of lives and make a great living in the process. We're starting the next challenge very soon, so you want to join before the doors close or you're going to have a long wait until the next one. So sign up now@creditherochallenge.com and if you're finding value in the things that I'm sharing on this podcast, spread the word and pass this along to anyone you think needs to hear it. And be sure to subscribe, rate, review or leave me a comment because I read each and every one of them. Visit my blog if you'd like to read the show notes and if you have a question that you'd like me to answer drop it down in the comment section and I'll be sure to answer it during a later episode. And remember, when is a myth not a myth, it's when people think it's the truth. So keep speaking the truth and keep changing lives.

Want a fast track to creating an amazing business that helps people, changes lives, and makes you a great living in the process? Then I'd like to invite you to my free online training@creditrepaircloud.com freetraining. In this free training, you will learn how to get clients willing to pay you even if you're just starting out, how to get easy credit repair results without being an expert, and how to get all the clients you'll ever need without paying for advertising. Again, this training is absolutely free. Just Visit Creditrepaircloud.com FreeTraining.