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Watch Out: Three Things That Could Go Wrong in Credit Repair

February 26, 2012 | Comments: 0 | Views: 140

Credit repair doesn't always produce the most predictable results. As hard as you may work to improve your credit score, there are things that could go wrong. Much of credit repair depends on how credit bureaus and creditors respond to you. If they're not willing to deal, you may have to work around them.

Your settlement, pay for delete, or goodwill request is deleted.

One of the best credit repair strategies hinges on your creditors' willingness to negotiate with you. You might need them to accept a lower lump sum payment on a past due balance (settlement), or to delete an account from your credit report pending your full payment (pay for delete), or to remove an entry from your credit report out of the goodness of their hearts (goodwill delete).

Not all creditors will work with you. But make sure you give the negotiation an honest shot before you call it quits. Don't accept "no" from the first representative you speak with. Ask to speak to a supervisor. In the case of pay for delete or goodwill requests, you can try to get the name and number of a higher up in the company who might be more willing to grant your request.

The credit bureau won't cooperate.

Credit bureaus also have a big role in the credit repair process. They're the companies that control what's on your credit report. There have been instances where consumers could not get the credit bureaus to remove legitimately inaccurate information from their credit reports even though these people forwarded the necessary proof.

If the credit bureau won't comply with your request to remove an error from your credit report, you have the right to dispute with the company that sent the error to the credit bureau. Send them the same proof. When that also fails, send a complaint to the Federal Trade Commission, the Federal agency who enforces the Fair Credit Reporting Act. Note that the new Consumer Financial Protection Bureau could be taking over this task later in 2012.

Your credit score could drop.

Everything could go as planned. Your creditors can agree to delete the items you request. The credit bureaus could remove errors. However, in some instances, your credit score could go down instead of up. What gives?

The credit scoring models have scorecards that group consumers with similar credit histories; FICO has ten of them. We don't know what all ten scorecards are, but there's speculation that one scorecard is for people with very little credit history, another is for people with no credit blemishes, and one for people who've filed bankruptcy. Your credit score could drop if changes to credit report put you on a new scorecard.

For example, you may have the best credit history among people who've filed bankruptcy, but once the bankruptcy is removed and you're on a different scorecard, your credit may not be as great compared to that new group of people.

Silver Lining?

Remember that most negative information remains on your credit report for just seven years. If you're unable dispute it or negotiate it away, you can wait a few years for it to disappear. And, the other good thing is that enough positive information can overshadow remaining negative items which will help your credit score overcome previous damage.

This guest post was written by Steve Dowell, a professional writer specializing in topics related to personal finance, debt relief, credit repair and more. Pass through for more tips and advice.

Source: EzineArticles
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