Bad credit is a burden most people don't realize how far reaching it is until it affects them. Having poor credit will affect your ability to buy a house, get a credit card, get a car loan (or any type of loan) through traditional credit providers. At best, you will be considered a high credit risk and pay exorbitant fees for any type of credit given. Or you may not qualify at all. Other consequences may include being declined for employment, paying high deposits for utilities, and not being able to get a checking or savings account.



The good news is that bad credit can be turned into good credit. You have a right to view your credit report and dispute information you feel is incorrect with the credit bureaus. You have the right to contact creditors and collection agencies reporting information on your credit report and require them to verify the information they are reporting is true.

At this point, I feel it is important to dispel some of the biggest myths about credit repair:

* Credit repair is done by disputing everything through the credit bureaus over and over again until the negative information is removed.

Unless you are disputing items that you know are incorrect, such as wrong personal information, items that are older than 7 years, etc., your primary methods of credit repair will be with the creditors and collection agencies. In fact, constant disputing of an item to a credit agency can hurt your progress as the credit bureau will likely flag the dispute as frivolous the second or third time around.

* If a negative item on the credit report is true, then it cannot be removed.

I honestly don't know where this comes from. From collection agencies and credit bureaus I imagine. Once an item has been disputed with a creditor or collection agency, the burden of proof is on the creditor/collector. If they cannot validate the account, late payment, chargeoff, etc., then the information must be removed from your credit report. This applies regardless of whether the information is true or not.

* Going through a credit repair firm will fix your credit.

For the most part, all a credit repair firm will do is dispute everything on your credit report through the credit bureau over and over again hoping some of the items are eventually removed. This is usually a temporary fix and can actually hurt your purpose as the credit bureau will likely flag the disputes as frivolous. You can do a much better job with more permanent results and save yourself a pile of money by doing the repair yourself.

* Getting a new credit file will start everything will a clean slate.

Getting a new credit file through whatever means is illegal and could get you into trouble. This method is also not seamless as your old information can merge with your new 'clean' credit report rendering it pretty much useless.

* Writing a 100 word statement on your credit report will persuade lenders to overlook bad credit.

Adding a 100 word statement to your credit report is ineffective. Lenders look at your credit score and use that to determine whether or not to lend you money. Usually the credit check is done automatically and you are either accepted or declined within 30 seconds. Trust me, that approval has nothing to do with whatever your 100 word statement says. The bottom line is if something is not directly related to improving your credit score, don't waste your time.