There is a big misunderstanding about credit repair. Most consumers feel that if they remove the bad credit from their credit report that their credit scores will greatly improve. This is not always true! There is also a belief that if they send letters to the credit bureaus, that the credit bureaus are obligated to remove bad credit if they don’t have the proof to back it up. Also not true.
Consequently, many consumers are dis-satisfied with credit repair companies stating that credit repair doesn’t work and takes too long.
Unfortunately, most people don’t have or take the time to understand how credit scoring works and what is the most effective way to improve their credit scores.
The key to moving someone from the 500’s (FICO) to the mid 700s requires a great deal more than just removing bad credit. It requires establishing both new and consistent month by month positive credit history. The chart below details that 50% of a credit score is made up of payment history and length of credit history. This is an on-going necessity requiring consumers to continue to use credit and pay down and pay off credit. It requires that consumers carry no more than 30% balances against their available credit lines. These three factors account for 80% of a credit score!!!
Removing negative credit is also part of the process but cannot be guaranteed. The bureaus are legally required to remove negative reporting if the creditor is either unable or unwilling to verify what they have reported. And this often happens. Once removed, it will typically not show up again due to the legal requirements required by the creditor. However, if the creditor does verify an account as accurate, the next step is to ask the creditor to investigate that same account. Under the law, the creditor is required to provide proof! As we have seen over the last several years, creditors keep lousy records and are often unable to document what they are reporting. In which case, they must remove the negatives.