I often come across entrepreneurs who want to obtain capital but their credit isn’t the best. Depending on the severity of the damage done to their credit history, I may or may not recommend credit repair. The truth of the matter is that credit repair may not work well for everyone. People often think that they can simply have things deleted from the credit report permanently and that’s not always 100% true. There are a few reasons why this isn’t true:
The account isn’t paid off – If you have a derogatory or delinquent account such as a charge-off, collection, tax lien, judgment, etc. and they remain unpaid, chances are it will be difficult to get them removed from your credit report. If they are removed, they will most likely come back after two or three months. A few years ago I hired someone to help me fix my credit (before I had any real knowledge on the subject), and they disputed several unpaid collections for me. The collections were removed and I saw my score jump 80 points. However, three months later those same collections begin reporting again. I then realized that I had wasted my money ($1,500 to be exact) on paying someone to have them removed when I should have just spent the money to pay off the collection accounts. Don’t make the same mistake I did.
The account is accurate – If you have a derogatory or delinquent account that is reporting to your credit history and you want to get it removed, you will not be able to do so if it is accurate (and the credit bureaus can verify it’s accuracy). Therefore if you have accounts that you know are accurate, I suggest you work on paying down those accounts and giving them time to fall off instead of trying to have them remove through a credit repair service.
The minimum reporting time hasn’t passed – Every account that is reporting to your credit history has a minimum amount of time that it is required to be reported. For example, a collection stays on for seven years (from the date of the initial missed payment) and a bankruptcy stays on for at least 7 to 10 years (after you file). You can attempt to dispute a negative account that may or may not be paid, but if the minimum reporting time has not passed, the account will most likely show up on your credit report again (especially if can be verified as accurate).
It’s No Overnight Fix
One of the biggest things I have noticed amongst people who want to utilize a credit repair service to fix their credit is they believe that it can be done quickly. This is not true. How quickly your credit can be repaired depends on the severity of damage done. If you have 100 negative accounts that have been not been paid off, chances are it will take more than just a few months to fix your credit. Therefore you need to have realistic expectations about what can be done.
Starting a credit repair program when you have unrealistic expectations will only cause you to be disappointed in the end. Credit repair is a process not an overnight fix. Keep that in mind before you spend your hard earned money on a credit repair service when you could use it to pay of the debts that have negatively impacted your credit score in the first place.