Credit repair is necessary for everyone who has encountered credit issues that caused their scores to drop. People with bad credit find it hard to qualify for new credit and when they do, they are presented with high interest rates and lesser rewards. Also, a good number of companies use your credit to decide whether to do business with you and to set the pricing for products and services you use. Its important you take steps to repair your credit. Here are the 9 things you need to know about credit repair.

What You Need To Know About Credit Repair

1. You can do it yourself | What You Need To Know About Credit Repair

The first thing you should know about credit repair is that you can do it yourself. Many people think they have to hire a professional credit repair company to help repair their credit. While a reputable credit repair company may be an option for some people, there’s nothing a credit repair company can do for you that you can’t do for yourself.

Removing negative information, for example, can be done with techniques like credit report disputes, debt validation, pay for delete, and goodwill letters. Many of these are the same strategies credit repair companies use to get negative information removed from your credit report. Doing it yourself not only saves you money but also gives you control over your own credit history. Once you know the credit repair tactics, you can use them anytime in the future if it becomes necessary.

2. Credit repair is about your credit report, not your credit score | What You Need To Know About Credit Repair

When you’re repairing your credit, you may watch for your credit score to go up. But credit repair is about improving the information on your credit report. This is what ultimately influences whether you have good credit or bad credit and is the basis of your credit score.

Checking your credit report is the first thing you should do when you’re ready to start working on your credit so you can see the information that’s hurting your credit. You can get a free copy of your credit report once a year from each of the major credit bureaus — Equifax, Experian, and TransUnion — by visiting www.annualcreditreport.com.

3. Your credit score helps you see where your credit stands | What You Need To Know About Credit Repair

Whether you have good or bad credit is based on the information in your credit report. However, it’s difficult to look at your credit report and tell whether your credit is good or bad. That’s why watching your credit score is useful in credit repair. A low credit score indicates a poor credit history that needs work. As your credit score improves, it’s an indication that your credit history is improving.

Your credit score is based on five categories of information: payment history, amount of debt, the age of credit history, types of credit accounts, and recent applications for credit. Improving your credit in each of these areas will boost your credit score.

Using a free credit score service like Credit Karma or Credit Sesame will allow you to monitor your credit progress at no cost.

4. Removing accurate negative information is tough

Credit bureaus are only legally obligated to remove inaccurately reported information from your credit report. It doesn’t matter whether those inaccuracies are positive or negative. It’s the fact the information is inaccurate that allows you to remove it from your credit report, not that it’s negative.

When accurately reported negative information hurts your credit, it’s tougher to remove this information because the credit bureaus are within their rights to report this information. In fact, the integrity of the credit system depends on credit bureaus reporting all accurate information, even information that’s negative.

There are some strategies to remove accurate negative information — like a collection account for a debt you legitimately owe. These strategies may take more time and effort than a simple credit report dispute. For these types of accounts debt validation (for collection agencies), pay for delete, and goodwill deletion requests are the best options.

5. Doing nothing might be a strategy | What You Need To Know About Credit Repair

Negative information won’t stay on your credit report forever. Most negative information will only stay on your credit report for seven years. There are a few exceptions. Chapter 7 bankruptcy and unpaid tax liens can stay on your credit report for up to 10 years. Unpaid judgments can remain on your credit report through the state’s statute of limitations for that type of debt if the statute is more than seven years.

If an account is nearing the credit reporting time limit, waiting for it to fall off may be less stressful and time-consuming than trying to remove the account with dispute letters or similar strategies.

Contrary to popular belief, taking action on a negative account does not extend the credit reporting time limit. So, if you pay off a six-year-old debt collection, for example, it will still drop off your credit report after year seven. Some newer versions of the FICO and VantageScore do not include paid collections in your credit score.

6. Closing accounts won’t help

Some consumers believe that only open accounts are included in a person’s credit report, that closing an account will remove it from their credit report. But that’s not true, closing an account won’t remove it from your credit report. All the details about the closed account will continue to be listed on your credit report as reported by your creditors. In some cases, closing an account can actually hurt your credit score.

If the account is in good standing or can be brought back into good standing by catching up on the past due balance, leaving the account open can actually help you repair your credit. You’ll need open, active accounts with a positive payment history to improve your credit score. Opening new accounts with a bad credit score can be difficult so rehabilitating the accounts you already have open can be much easier.

7. Credit repair companies are often untrustworthy

With bad credit, you are vulnerable to credit repair companies. Many credit repair companies make unrealistic promises — charge upfront fees and fail to deliver on their services. All these are prohibited by Federal law, but consumers who are unfamiliar with the law wouldn’t realize they were being taken advantage of until it’s too late.

Over the past several years, the Federal Trade Commission has banned dozens of credit repair companies who have broken the law.

A few signs you’re dealing with a shady credit repair company: they ask you pay upfront before any services begin, cite an affiliation with the government or special relationship with the credit bureaus, promise a specific credit score, promise to delete accurate information from your credit report, fail to inform you of your right to dispute information directly with the credit bureaus, or ask you to waive your rights under the Credit Repair Organizations Act.

8. It doesn’t happen so fast | What you need to Know About Credit Repair

It takes time to rebuild a bad credit history, it doesn’t happen so fast. Your credit score considers your most recent credit history more significantly than older items. A few months of on-time payments is a step in the right direction, but it won’t give you excellent credit right away. As time passes and the negative information falls off or gets older, and you replace it with positive information, you’ll see your credit gradually improve.

Repairing bad credit takes time, so it’s important to be patient with the process. You can only see immediate boosts when something is deleted from your credit report.

9. Your improved credit won’t last if you don’t change your habits

Many people go through credit repair — whether doing it themselves or hiring a company — so they can borrow money, for a mortgage or auto loan, for example. There’s nothing wrong with this. Many people, unfortunately, find themselves back in the same situation because they don’t borrow responsibly, ending up with more debt than they can handle and slip back into habits of missing payments.

If you want your good credit to last, you have to adopt habits that will maintain good credit. This means borrowing only what you can realistically afford to pay back (and maybe even a little less). Paying your bills on time is perhaps one of the best things you can do for your credit.