LJS Financial Solutions

Debunking Credit Repair Myths: What Really Works

Oct 24, 2025By Lloyd Spooner
Lloyd Spooner

Understanding Credit Repair

Credit repair is often surrounded by misconceptions and myths, leading many to wonder what truly works. Understanding the basics is the first step to demystifying the process. Credit repair involves correcting inaccuracies on your credit report, improving your credit score, and managing your finances effectively.

credit report

Myth 1: Credit Repair is Illegal

A common myth is that credit repair is illegal. In reality, credit repair is both legal and regulated. The Credit Repair Organizations Act (CROA) protects consumers by ensuring transparency and fairness in credit repair services. It's important to work with legitimate companies that comply with these regulations.

Myth 2: You Can't Fix Your Credit on Your Own

Many believe that only professionals can repair credit, but you can tackle it independently. By obtaining your credit reports from the three major bureaus—Equifax, Experian, and TransUnion—you can identify and dispute errors on your own. This proactive approach can be effective and empowering.

financial planning

Steps to Self-Repair

If you decide to repair your credit yourself, follow these steps:

  1. Request your free credit reports from AnnualCreditReport.com.
  2. Review each report carefully for inaccuracies.
  3. Dispute any errors directly with the credit bureau.
  4. Monitor your credit regularly to track improvements.

Myth 3: Closed Accounts Are Bad for Your Credit

Another prevalent myth is that closing accounts negatively impacts your credit. While closing accounts can affect your credit utilization ratio, it doesn't always harm your score. It's essential to assess the potential impact and make informed decisions based on your financial situation.

credit score

Myth 4: Paying Off Debts Erases Them from Your Credit Report

Some believe that paying off a debt removes it from their credit report. While settling debts is crucial for your financial health, these accounts will remain on your report for up to seven years. However, showing a zero balance is favorable and indicates responsible credit management.

What Really Works

Effective credit repair involves more than just disputing errors. Here’s what truly makes a difference:

  • Pay Bills on Time: Consistent, on-time payments are crucial.
  • Reduce Debt: Lowering your credit card balances improves your utilization ratio.
  • Diversify Credit: A mix of credit types can positively impact your score.

Conclusion

Debunking these myths reveals that credit repair is an achievable goal with the right knowledge and approach. Whether you choose to do it yourself or seek professional help, understanding what truly works will guide you toward better financial health.