Can You Clear Bad Credit History?

While Doc Brown and Marty McFly may have had a time machine to go back and fix mistakes in the past, you and I don’t have that luxury.

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Credit reports have a nasty habit of uncovering even the smallest financial hiccup from your past. 

In this article, we’re going to examine how credit reports work, what negative items may appear on a credit report, and how to get some of these items removed through a process called credit repair. We’ll also look at if you can undertake this process yourself or if it’s better to get the best credit repair companies in Houston to take care of it for you. 

How Do Credit Reports Work?

Every time you borrow money from a financial institution, whether it's a mortgage, a car loan, or a credit card, the bank starts reporting the status of this account to the three credit reporting agencies in America—Experian, Equifax, and TransUnion. 

The reporting agencies constantly evaluate your accounts, if you’ve missed payments, and what accounts are open or closed. Taking all these details into consideration, these agencies calculate your credit score—a number between 300 and 850.

What Negative Items Might Appear on a Credit Report?

While you may have missed one car payment last year then got yourself back on track, the credit reporting agency definitely noticed—a single missed payment that's more than thirty days late can drop your score by fifty points or more. These late payments will be listed on your report for years, and any financial institution you approach for a loan will be able to see these late payments and may have reservations about lending you money. 

Besides missed payments, other negative items that may appear on a credit report are:

  • Bankruptcy

  • Foreclosures

  • Accounts closed due to non-payment

  • Accounts that have been sent to collections

Even if you pay off your creditors and close the accounts, the negative marks on closed accounts will still show for a few years.

How Can We Fix This?

Let’s not mince words here–if there is a legitimate foreclosure or credit account that went bad due to non-payment, there isn’t much to be done except to try to keep your future accounts in good standing while your credit slowly recovers. However, people may sometimes have a poor credit score not because they did something wrong, but because of a mistake in the records. For example, let's say that you paid off your car loan last year, but due to an error, the bank has not marked the account as closed—even worse, they’ve been reporting you as missing payments for the last fifteen months!

These inaccuracies can be fixed through a process called credit repair. This is done by disputing these inaccuracies with the credit reporting agencies and the banks. Unfortunately, the process is time-consuming and involves enough paperwork to fill a filing cabinet. Credit repair companies like The Phenix Group will take this process off of your hands—they’ll make the calls, handle the paperwork, and advise you on the steps that need to be taken. They’ll also examine every aspect of your credit report and give you suggestions on small things you can do to help yourself or how a credit card can improve your credit score.

Do Your Homework

Unfortunately, many unscrupulous companies and individuals out there are looking to take advantage of people. Beware of any company making outlandish claims, such as performing full illegal credit sweeps or offering you a loan that no one else can.

In Summary

When it comes to negative items on a credit report, it's possible to have inaccurate items removed, especially if you have a qualified credit repair company, such as The Phenix Group, at your side. Then, if you keep your accounts in good standing, your credit will slowly heal and your score will improve.

Read more about is credit sweep legal.

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