Misinformation and half-truths abound in discussions about credit reporting and scoring. People have so many different ideas about what is true when it comes to dealing with their credit that regardless of the question you ask, you are liable to get a wide variety of conflicting information.

At the end of the day, all this ignorance about the credit system does nothing but help the lenders and other financial institutions who use your credit information. If people simply knew a little more about their credit, they would be able to take steps to improve their credit. By improving their credit, people could avoid having to pay the high interest rates that pad the lenders profits.

What follows are some of the myths people believe to be true about the consumer credit system. By distancing yourself from these defeatist fallacies, you can open yourself up to learning the truth about your credit and what you can do to manage it.

1) The Myth: The big three credit bureaus (Equifax, Experian, and Trans Union) are official agencies tasked with maintaining your credit reports.

The Truth: These three companies are just that, for-profit companies. The big three credit bureaus are businesses who make money by collecting consumers financial information and then selling it to creditors, marketers, employers, and even back to you I the form of your credit reports.

2) The Myth: There law states that your creditors must report late payments, collections, charged off accounts, etc. to the credit bureaus. Once these items are added to your credit reports, they must remain on your reports for 7 years.

The Truth: The Fair Credit Reporting Act (FCRA) does not require anything to be reported to the credit bureaus. In addition, the FCRA does not list a minimum amount of time that reported items must be listed on you credit reports. It only requires that listings remain on your credit reports for no more than 7 years for most items. The truth is that your creditors can remove items from your credit reports at any time.

3) The Myth: There is nothing you can legally do to repair your credit.

The Truth: There is a wide variety of things you can do to add positive credit to and remove bad credit from your credit reports. Every law that applies to the credit bureaus is written to protect you. By taking advantage of their rights under these laws, people have forced the credit bureaus to permanently delete millions of negative items from their credit reports. For every person that claims that it is impossible to remove bad credit from your credit reports, there is another person who has already done it.

4) The Myth: It is impossible to remove accurate information from your credit reports.

The Truth: Actually, this myth is correct, but not in the way most people think. When the FTC talks about removing accurate information from your credit reports, they are using the word “accurate” in the legal sense as defined by numerous credit laws and legal decisions. To help get a better understanding of what “accurate” means in this sense, it helps to know what is considered inaccurate. According to the law, inaccurate credit listings also include listings that are untimely, misleading, biased, incomplete, and unverifiable.

So yes, it is impossible to remove “accurate” negative information form your credit reports, but many of the things you think may be accurate right now you will know are actually misleading, biased, unverifiable, etc. once you learn more about the consumer credit laws.

5) The Myth: It doesn’t matter if something gets removed from your credit reports, it will just come back.

The Truth: While it is possible for a deleted item to reappear on your credit reports, it is rare. The FCRA makes it more difficult from the credit bureaus to re-report an item to help protect you from having to continually dispute the same items over and over again.

6) The Myth: It is illegal for anyone to repair your credit for you.

The Truth: You have the right to enlist the help of a credit repair professional if you so choose. In fact, U.S. District Court Judge, J. Wexler said about credit repair companies that “since allowing third parties to assist consumers will likely lead to the expedited correction of credit reports, it will further the purposes of the [fair credit reporting] acts.”

7) The Myth: There is no reason to use a credit repair company because you can repair your own credit for free.

The Truth: While people point out that you can save money by repairing your own credit, they rarely mention the other costs associated with repairing your own credit reports. Aside from the material costs of mailing certified letters (a practice that is recommended by most credit repair experts), many people also have to spend a significant amount of time learning about the various credit laws, learning the tactics for writing effective dispute letters, dealing with credit bureau stall letters and information requests, and other tasks associated with managing the credit repair process. 

When considering all the costs involved with repairing their own credit, many people find that it is more than worth the money to have someone else repair their credit for them.

8) The Myth: Repairing your own credit is easy.

The Truth: For a few people, repairing their credit is easy. Most people find out that the opposite is true. Remember that lenders want to keep your credit score low and the credit bureaus do not want to deal with you because there is no money in it. The law may be on your side, but these organizations are not and they will work to make the credit repair process difficult. People may say that all you have to do is write a dispute letter and send it to the credit bureaus. But what do you do when this doesn’t work for you? At that point, the real work of credit repair begins.

To illustrate the difficulty of repairing your own credit, consider that, according to a survey of over 2,000 Lexington Law credit repair clients, almost 40% had attempted to repair their credit on their own before enlisting the help of the firm.

There are few topics as polarizing as credit repair. Depending on who you talk to, credit repair is usually thought of as impossible, illegal, something you can only do yourself, or something you need professional help to perform. Rarely do you find someone with a perspective on credit repair that is not at the far end of one of these extremes.

The fascinating thing is that in most cases, whatever people believe to be true will be true for them.

The poster on the Yahoo! Answers forum who states that "there is NO SUCH thing as Credit Repair....it's a scam...." will never realize any benefits from repairing their own credit. By believing that credit repair is impossible, they are fulfilling their own prophecy by ignoring their rights to dispute their own credit. By not believing it can be done, they are proving their own point. This person, and every other person who ignores the possibility of credit repair, will fall into the category of people whose credit scores will only improve through the passage of time.

The same is true of people who believe that credit repair companies do not work. Another poster on Yahoo! Answers stated that

"There is no such thing as repairing your credit through someone else. If they can, they are doing this via an illegal way and be extremely careful, as it can end YOU up in jail and fined.
The ONLY way to repair credit is to do it yourself.
Pay your bills on time ;o)"

Along with being misinformed about how the credit repair process works, this person is letting their flawed knowledge keep them from so much as investigating the possibility that a credit repair company may be able to help them out. Once again, in believing that it is impossible for a credit repair company to provide any value, this person has assured that they will never receive any value from a credit repair organization.

It is truly astounding how many people out there believe that credit repair cannot work and credit repair companies are nothing but scams. It is also unfortunate that it is these voices that seem to be the loudest because not only are they making credit repair an impossibility for themselves, but they are convincing so many other people to not even attempt to repair their own credit.

What is equally astounding is how these people can be so passionate about outing credit repair as a pipe dream and a scam when there are so many other people out there who are living proof that credit repair does in fact work. These are the people who have allowed for the possibility that their credit could be repaired and realized the truth about their credit reports.

It is hard to believe that anyone could completely dismiss the idea of credit repair when there are stories like this:

"I signed up for [credit repair firm] a couple of years ago. They basically write a couple of letters a month on your behalf to either businesses or credit reporting companies asking for verification of debt, that kind of thing, or if you instruct them, actually challenging the debt. After a few rounds of this, negative credit items start to fall off your report. You can totally do this yourself, but it's been worth the cost to me (something like $40/month) since I am too lazy to regularly write this kind of letter. I also like how when the credit bureaus do bother to write back, they're always pretty whiny and pissy about it.

Some people seem to think this is some kind of scam (like, paralegals write the letters on your behalf instead of attorneys, and some people don't seem to understand that when you give an attorney "power of attorney," they can write letters as you), but I think it's a fair price for something I was too lazy to do myself. Ultimately, they pretty much got rid of all the negative items on my report except for the ones that were at least semi-legitimate. (I'm not going to pay a parking ticket I got five years ago in a state I'm not going back to.) The ones they did get rid of were things like AOL continuing to charge a credit card after a) I had cancelled the AOL account, and b) I had cancelled the credit card! It just wasn't worth my time to chase this down with AOL or the credit card company.

It's annoying that I'm responsible for fixing something that this bogus industry screws up in the first place, but other than that, I'm a happy "credit repair" customer."

People who believe that credit repair is impossible will never see any benefit from it. People who believe that credit repair can only be done by themselves will only see the benefits of their personal efforts. People who believe that credit repair companies do not work will never invite the opportunity to have a credit repair company work for them.

Ultimately, when it comes to credit repair, we all create our own truths. All anybody can ask of you is to perform your own research instead of letting others choose your truths for you.