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LEARN HOW TO START, RUN, OR GROW YOUR CREDIT REPAIR BUSINESS

The 10 Biggest Credit Repair Myths

By: Daniel Rosen October 18, 2022

When is a myth not a myth? 

When you think it's the truth!

That's why on this week's Podcast, I correct a lot of financial misinformation, urban legends, and fake news by debunking the Top Ten Credit Repair myths!

 

Mark Twain once said, "A lie can travel halfway around the world before the truth puts on its shoes."

Only he didn't say that.

It turns out the internet is wrong—a lot. If you search for that quote, you will find it attributed to dozens of other famous people.

The truth is so difficult to come by that there's an internet law called "Cunningham's Law," which states "the best way to get the RIGHT answer on the internet is not to ask a question; it's to post the WRONG answer," and you'll be corrected.

The law is named after Ward Cunningham, the inventor of Wikipedia, and unfortunately, he's right. 


Every day we're flooded with incorrect information, and it makes educating people about financial issues even more difficult because they first have to unlearn what they already think they know. 

So, we need to debunk all the bad word-of-mouth advice and tell people the realities of Credit Repair.

How does this relate to us?

There are so many myths about Credit Repair it was hard to trim this list down to just ten. So, here are a few honorable mentions before we get to our Top Ten!

No. A perfect credit score doesn't matter. You just need a score within a specific range to convince lenders you're credit-worthy. The higher your score is, the better, but there are no additional products or benefits for having a perfect score. 

Yes. "Good Debt" is a real thing. If you weigh your options and decide that borrowing a reasonable amount of money is a smart financial decision, like investing in yourself and in future success through education, equipment, etc. That's an example of good debt, and if you make the payments regularly and on time, it will improve your credit.


No. Bankruptcy is not a Get Out of Debt Free Card. It's an emergency parachute. Bankruptcy is a huge negative mark that stays on your credit report for up to ten years, and it should only be done after you consult a financial advisor or lawyer first. 

Yes. Young people need to pay attention to their Credit.  The length of your credit history is a factor in your score, the minimum age you can apply for credit is 18, and financial experts recommend people start building credit as soon as possible.

Here's the thing to remember…Some of these myths are created accidentally, like a game of telephone, some are holdovers from something that used to be accurate but times changed…and some are the result of intentionally withholding information so that people stay confused and discouraged from pursuing a financial education. 

Here's why this is important…

We need to do the work of not only speaking the truth but dispelling lies, rumors, and falsehoods. 

I can tell you from experience that one financial error can have an extreme and lasting effect on your life. In my case, one bank error not only ruined my life, but it completely changed the course of my life and even my profession. So I'm very sensitive to errors and misinformation around credit. 

So without further delay…

Here are the TOP TEN CREDIT REPAIR MYTHSDEBUNKED!!!

 

MYTH #1 - The Credit Bureaus are Part of the US Government

The word "Bureau" tricks people into believing that Equifax, TransUnion, and Experian are part of the government or a non-profit organization when they are NOT. In fact, they are for-profit, publicly-traded companies that make their money by selling your information and partnering with banks to justify charging you higher fees. To them, you are not a citizen that needs to be protected. You're a number, and you're a revenue stream.

MYTH #2 - Your Income & Education Impact Your Credit Score

Your credit scores are just measures of risk, whether you pay your bills on time and in full. A rich person who doesn't pay their bills can have a bad score, and a poor person who pays them can have a great score. Your demographic information doesn't appear on your credit report, so it doesn't influence your credit scores. Your education, salary, and how much money you have in the bank are not factored in. 

MYTH #3 - The Amount of Debt You Have Matters

Neither the size of your debt nor your debt-to-income ratio directly affects your credit score. What matters here is the amount of debt vs. the amount of available credit you have. For that reason, you'll want to check your reports to make sure they are reporting the correct credit limits on all of your accounts.

MYTH #4 - Renting Hurts Your Credit 

Renting doesn't hurt your credit, and the industry is quickly changing, so paying your rent every month will actually help your credit. Several key companies (Experian, Mastercard) have already released programs and apps that count monthly rental payments towards building your credit score.

MYTH #5 - Using a Debit Card Improves Your Credit

Debit cards are not a form of credit. Their activity is not reported to the Bureaus, they do not affect your credit history, they don't show up on your credit report, and they don't affect your credit score. It's the same as if you made a purchase with a pre-paid card or cash. But I DO believe that if you have a credit card addiction like I had and serious credit card debt like I had, the only way to cure it is to switch to only using a debit card. That's what I did, and by changing my patterns and slowly chipping away at the debt, my score began to rise. For that reason, I still don't use personal credit cards ever. I think they're evil.  

MYTH #6 - Paying Off an Overdue Debt Removes it From Your Report

Paying off old debt does not erase its negative mark on your report or lower the impact of the late payment. These items can stay on your report for up to seven years. One way you can attempt to speed up the process is to contact the debt collecting agency first (before you pay off the past-due debt) to negotiate that the items be deleted from your report in exchange for a partial or full payment of the outstanding debt.

MYTH #7 - Closing a Credit Card Improves Your Credit Score

Closing a credit card never improves your credit score. In fact, the opposite is true. It usually lowers it. There are circumstances where it's in your long-term financial interest to switch to no annual fee cards or close your card, but it doesn't directly improve your credit. Closing an account can shorten your overall credit history and can increase your credit utilization, both of which negatively impact your score. Like I said earlier, I never use credit cards, but I never close the accounts. So on my reports, it looks like I've had them for decades.

MYTH #8 - Marriage and Divorce Affect Your Score

When you get married, you share everything except credit reports. Each person in that marriage has their own credit report. When it comes to applying for credit with your partner, like applying for a mortgage, each person's score is taken into consideration by the lenders, even if you have shared accounts. Divorce is similar in that it doesn't directly impact your credit score. However, Divorce often ruins people's credit. But that's because of the circumstances related to the divorce, not the divorce itself. If you are both financially responsible people and you have similar credit scores and histories, you shouldn't expect to see a change in your reports. But if you were married to someone who was financially irresponsible and you had a joint account, their charges and unpaid bills will affect your credit. Divorce is an emotional time, but credit needs to be a priority to make sure lasting damage isn't done to either person's finances.

MYTH #9 - Checking Your Score Hurts Your Score

This is probably the most common myth. Every American is entitled to a free annual Credit Report, but that free report doesn't contain scores. Checking your own reports and scores on a monthly basis with a credit monitoring account is a GOOD idea, and it will NEVER affect your score. However, applying for new credit, like a credit card, car loan, or mortgage, requires a "hard pull," which will always cause a ding to your credit score.

MYTH #10 - Credit Reports are Accurate

Errors on credit reports are way more common than people realize. Nearly 8 out of 10 people have errors on their credit reports, and most don't know it. A single piece of inaccurate or outdated information on a credit report can keep you from getting approved and affect the terms and interest rates – and they can cost you a lot of money. These errors can ruin lives. They need to be found and fixed. That's why it's important to check your reports and scores on a monthly basis.

At this point, it should be clear why consumers need to educate themselves and why Credit Repair Specialists need to inform their customers about these myths.

Myths might be fun entertainment, but we all need a healthy dose of reality when it comes to financial empowerment. 

I’ll end by saying…

If you don’t already have a Credit Repair Cloud account, check it out. It’s the software that most Credit Repair businesses in America run on. Just sign up for a 30-Day Free Trial at CreditRepairCloud.com/freetrial

And If you’d like me to hold you by the hand as you launch your own credit repair business, check out our Credit Hero Challenge!

Challenge-Stack-Mockup-Final

It’s an amazing program where you’ll learn the processes that have made millionaires, and it costs less than you'll spend taking your family to McDonald’s for dinner.

We’ve got another challenge starting in a few days, so grab your spot right now at CreditHeroChallenge.com!

Until then, remember, keep the facts on your side…

And keep changing lives!

Be sure to subscribe on your favorite platform below!

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Topics: Podcast

Transcript

Daniel Rosen  0:00  
Hey, credit heroes. When is a myth not a myth? Well, it's when you think it's the truth. That's why today I'm going to correct a whole lot of financial misinformation, urban legends and fake news by debunking the top 10 Credit Repair myths, so you better stick around. So the big question is this, how can we take our passion for helping people with their credit and turn it into a successful business without taking loans without spending a fortune by bootstrapping it from nothing? So we can help the most people and still become highly profitable? That is the question, and this podcast will give you the answer. My name is Daniel Rosen, and welcome to credit repair business secrets. Okay, if this was your first time listening to my podcast every week, I cover industry news, financial tips and entrepreneurial advice for bootstrapping your business from nothing. This show is the best how to guide for business owners, and there is no other podcast like it, so be sure to click that subscribe button now and get ready to start changing lives. Okay, so there is a whole lot of bad misinformation that's been swirling around the credit repair industry. So that's why today I'm going to correct all the urban legends and fake news by debunking the top 10 Credit Repair myths. Now before we get started, this podcast is brought to you by credit hero score. Credit Bureau score is the only credit monitoring service that integrates directly with credit repair cloud, get instant access to your credit reports and scores by signing up for a seven day trial for only $1. Sign up right now at credit heroes score.com.

Okay, let's get into this. Mark Twain once said, A lie can travel halfway around the world before the truth puts on its shoes. Only. He didn't say that. It turns out the internet is wrong. It's wrong a lot. And if you search for that, quote, you're gonna find it attributed to dozens of other famous people. See, the truth is so difficult to come by that there's even an internet law called Cunningham's law, which states that the best way to get the right answer on the internet is not to ask a question. It's to post the wrong answer. And you'll be corrected. And that law is named after Ward Cunningham, who is the inventor of Wikipedia. And unfortunately, he's right. Every day we're flooded with incorrect information. And it makes educating people about financial issues way more difficult, because they first have to unlearn what they already think they know. So we need to debunk all the bad word of mouth advice and tell people the realities of credit repair. So how does this relate to us? Well, there are so many myths about credit repair, that it was very hard to trim this list down to just 10. So here are a few honourable mentions before we get to our top 10 No, a perfect credit score doesn't matter. You just need a score within a specific range to convince lenders that you are credit worthy. The higher your credit score is the better but there are no additional products or benefits for having a perfect score. And yes, good debt is a real thing. If you weigh your options and decide that borrowing a reasonable amount of money is a smart financial decision. Like investing in yourself when and future success through education or equipment. That's an example of a good debt. And if you make the payments regularly and on time, it will improve your credit score. And no bankruptcy is not a get out of debt free card. It's an emergency parachute. Bankruptcy is a huge negative mark that stays on your credit report for up to 10 years. And it should only be done after you consult with a financial advisor or a lawyer. And yes, young people need to pay attention to their credit. The length of your credit history is a factor in your score. And the minimum age that you could apply for credit is 18. So financial experts recommend that people start building credit as soon as possible. Here's the thing to remember, some of these myths are created accidentally like a game of telephone, and some are holdovers from something that used to be accurate but times have changed and some are the result of intentionally withholding information so that people stay confused and discouraged from pursuing financial education. Here's why this is important. We need to do the work of not all least speaking the truth, but also dispelling lies, rumours and falsehoods. And I can tell you from experience that one financial error can have extreme and lasting effect on your life. In my case, one bank error not only ruined my life, but it completely changed the course of my life. And it even changed my profession. So I'm very sensitive to errors and misinformation around credit. So without further delay, here are the top 10 Credit Repair Myths Debunked. Myth number one, the credit bureaus are part of the US government. Well, that's not true. That word Bureau it tricks people into believing that Equifax, TransUnion, and Experian are part of the government or some kind of nonprofit organisation when they are not. In fact, they are for profit publicly traded companies that make their money by selling your information and partnering with banks to justify charging you higher fees and to them, you're not a citizen that needs to be protected. No, you are a number you are a revenue stream. Myth number two, your income and education impact your credit score? Well, your credit scores are just measures of risk, whether you pay your bills on time and in full. A rich person who doesn't pay their bills can have a bad score, and a poor person who does pay their bills can have a great score, your demographic information doesn't appear on your credit report. So it doesn't influence your credit scores at all your education, your salary, and how much money you have in the bank are not factored in Myth number three, the amount of debt you have matters. Okay, neither the size of your debt nor the debt to income ratio directly affect your credit score. What matters here is the amount of debt versus the amount of available credit you have. And for that reason, you'll want to check your credit reports often to make sure that they are reporting the correct credit limits on all of your accounts. Myth number four, renting hurts your credit. Well, renting does not hurt your credit. And the industry is quickly changing so that paying your rent every month can actually help your credit. Several key companies, Experian and MasterCard have already released programmes and apps that count monthly rental payments towards building your credit score. So that is awesome. Myth number five, using a debit card improves your credit, okay? Debit cards are not a form of credit. So their activity is not reported to the credit bureaus, they do not affect your credit history, they do not show up on your credit report, and they do not affect your credit score. It's the same thing as if you made a purchase with a prepaid card or with cash. But I do believe that if you have a credit card addiction like I had, and serious credit card debt, like I had, the only way to cure it is this switch to only using a debit card. That's what I did. And by changing my patterns and slowly chipping away at the debt, my score began to rise. So for that reason, I still don't use personal credit cards ever. I really do think they are evil. Myth number six, paying off an overdue debt removes it from your report. No paying off old debt does not erase its negative mark on your report, or lower the impact of a late payment. These items can stay on your credit report for up to seven years. Now one way you can attempt to speed up the process is to contact the debt collecting agency first, before you pay off the past due debt to negotiate that the item be deleted from your report in exchange for a partial or full payment of the outstanding debt. Myth number seven, closing a credit card improves your credit score. Okay, no and no closing a credit card. It never improves your credit score. In fact, it's the opposite it usually lowers it closing a credit card account can shorten your overall credit history and it can increase your credit utilisation and both of these will negatively impact your score. Like I said earlier, I never use credit cards but I never closed the accounts. So on my credit reports, it looks like I've had them open for decades. Myth number eight, marriage and divorce affect your score. Okay, When you get married, you share everything except credit reports. Each person in that marriage has their own credit report when it comes to applying for credit with your partner, like applying for a mortgage together, while each person score is taken into consideration by the lenders, even if you have shared accounts. Now, divorce is similar in that it doesn't directly impact your credit score. However, divorce does often ruin people's credit, but that's because of the circumstances related to the divorce and not the divorce itself. If you are both financially responsible people, and you'll have similar credit scores and histories, you shouldn't expect to see a change in your reports. But if you were married to someone who was financially irresponsible, and you had a joint account, their charges and unpaid bills will affect your credit divorces and emotional time, but credit needs to be a priority to make sure that lasting damage isn't done to either person's finances. Myth number nine, checking your score hurts your score. Okay, this is probably the most common myth, every American is entitled to a free annual credit report. But that free report doesn't contain scores, checking your own scores and annual reports on a monthly basis with a credit monitoring account. That is a really good idea, and it will never affect your score. However, applying for new credit like a credit card, a car loan or a mortgage that requires a hard pool, which will always cause a ding to your credit score. Myth number 10. Credit reports are accurate. Okay, errors on credit reports are way more common than people realise. nearly eight out of 10 people have errors on their credit reports, and most don't even know it. A single piece of inaccurate or outdated information on a credit report can keep you from getting approved and can affect the terms and interest rates, and they can cost you a whole lot of money. These errors can ruin lives, so they need to be found and fixed. And that's why it's very important to check your reports and scores on a monthly basis. At this point, it should be really clear why consumers need to educate themselves, and why credit repair specialists need to inform their clients about these myths. Myths might be fun entertainment, but we all need a healthy dose of reality

when it comes to financial empowerment. And just a reminder, this podcast is brought to you by credit hero score. Credit hero score is the only credit monitoring service that integrates directly with credit repair cloud get instant access to your credit reports and scores by signing up for a seven day trial for only $1 Sign up right now at credit hero score.com. And now from my favourite part of the episode each week, I'm featuring one of our credit heroes inside our credit repair cloud Facebook community so that you can see firsthand what real people are doing as they run and grow their business. And today's spotlight is on Michelle see. And it's actually a different Michelle see than last episode. What are the odds? Okay, so I noticed that Michelle left a comment a few days ago in the community and it struck a chord with me, she posted a video that showed one of her clients having all three credit scores boosted by 24 points or more. And Michelle wrote, I just wanted to share with you guys one of my clients recent results. I mean, I originally started my credit business in 2018 got burned out, took a couple years break now relaunched and I've helped over 10 plus people in the last 60 days. So blessed for this group. It's okay to take a break. Just never give up. And Michelle, I know exactly what you mean. Sometimes life can burn you out. And sometimes you feel like you don't have anything left. But all you really need to do is recharge, but you never gave up. So thank you for being amazing. And I'll end by saying if you don't already have a credit repair Cloud account, check it out. It's the software that most credit repair businesses in America run on. Just sign up for a 30 day free trial at credit repair icloud.com/free trial. And if you'd like to change lives and grow your own credit repair business, check out our credit hero challenge. It's a live experience that has helped tonnes of credit heroes to get certified in disputing and to gain confidence as they run their credit repair business on a solid foundation so they can change a whole lot of lives and make a great living in the process. We're starting next challenge very soon. So you want to join before the door is closed or you're going to have a long way to go Hold the next one. So sign up now at credit hero challenge.com. And if you're finding value in the things that I'm sharing on this podcast, spread the word and pass this along to anyone you think needs to hear it. And be sure to subscribe rate review, or leave me a comment because I read each and every one of them. Visit my blog if you'd like to read the show notes. And if you have a question that you'd like me to answer, drop it down in the comment section, and I'll be sure to answer it during a later episode. And remember, when is a myth not a myth? It's when people think it's the truth. So keep speaking the truth and keep changing lives. One a fast track to creating an amazing business that helps people change his lives and makes you a great living in the process that I'd like to invite you to my free online training at credit repair cloud.com/free Training. In this free training, you will learn how to get clients willing to pay you even if you're just starting out how to get easy credit repair results without being an expert, and how to get all the clients you'll ever need without paying for advertising. Again, this training is absolutely free. Just visit credit repair cloud.com/free training

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