Credit repair

In the beginning, credit cards were just charge accounts, offered by individual stores and only usable at those stores. The first credit card that could be used at multiple locations was offered by The Diner's Club in 1950. (full story)

In 1984, MasterCard was the first to use a hologram on its cards to deter fraud.

Discover Card History

Discover Card was introduced by Sears in 1985 and gained notoriety because it charged no annual fee

Credit card companies are prohibited by law from sending you a card that you didn't ask for, unless it's a renewal or a substitute card. If you get a credit card you didn't apply for, contact the Federal Trade Commission and file a complaint.

Each direct mailing acquisition costs approximately $80, according to R.K. Hammer, bank card advisory firm.

DEBUNKING POPULAR CREDIT REPAIR MYTHS

A simple Google search for “credit repair myths” returns over 300,000 results. I guess it's pretty safe to say that there are some myths out there about credit repair. Some of the more popular ones like “credit repair is illegal” and “credit repair doesn't work” are absolutely false. Others, like “credit repair agencies are all scams” and “negative items can't be removed if they can be verified” have some truth to them. If you're considering working on repairing your credit, here's what you need to know.

MYTH: CREDIT REPAIR DOESN'T WORK

It's probably a good idea to decide what the word “work” means to you. The truth is, that with a bit of effort, follow-through, and persistence, just about any credit report can be repaired to some degree – even if it's only having one item removed. However, more often than not, there can be much greater results, and some result is certainly better than no result at all, especially when it comes to your credit reports.

MYTH: NEGATIVE INFORMATION THAT CAN BE VERIFIED CANNOT BE REMOVED

This one is a little tricky, and it's all because of one little word – “can.” In the simplest terms possible, just because an item can be verified doesn't mean that it will be. Under the Federal Fair Credit Reporting Act, a credit bureau has a reasonable amount of time to verify any item that's disputed. This “reasonable” amount of time is generally understood to be 30 days. And let's face it, there are a whole bunch of things that could go wrong and delay the process – incorrect addresses or names, failure of the creditor to respond – I'm sure you can imagine plenty more. So, the bottom line is this: if the bureau is unable to verify the item within 30 days, the disputed item must be removed.

MYTH: CREDIT REPAIR AGENCIES ARE SCAMS

While it's true that there are a fair number of credit repair scams out there (do a Google search on that one!), there are plenty of reputable firms out there as well. Although you have the right to dispute items on your credit report yourself, sometimes it's much easier to have someone with experience do it for you, and save yourself the time and frustration. If you choose to hire a firm to repair your credit, do your homework, and remember these two tips:
Avoid firms that guarantee a result, there are factors that they can't control, and guaranteeing a specific result is like a lawyer guaranteeing he can get you acquitted – there's no possible way to accurately predict the outcome.

MYTH: YOU HAVE TO HIRE A LAW FIRM OR CREDIT REPAIR AGENCY TO REPAIR YOUR CREDIT

Although in many cases it's easier and more effective to do so, under federal law, you can do it yourself. Going back to the lawyer analogy above, you can also choose represent yourself in a court of law, although in most cases, it's a good idea to have someone of experience represent you. Repairing your credit can be time consuming and frustrating, not to mention kind of tricky – an agency or firm that has experience with the ins and outs can save a whole lot of time and effort, and many times is worth the modest fee they charge.

MYTH: IF I JUST PAY OFF MY DELINQUENT ACCOUNTS AND MAKE ALL MY PAYMENTS ON TIME, MY SCORE WILL IMPROVE BY ITSELF

Although those are both good steps, the fact is that just because a delinquent account, or even an account that has gone to collections, has been brought current and paid off doesn't necessarily mean it will no longer hurt your credit report – these items can continue to be reported for up to seven years. And although making payments on time is always a good idea, payment history only accounts for about 35% of your overall score, and it can take a long time to affect your credit score by doing nothing more than paying on time every month. Which leads us to our last myth…

MYTH: IF I REMOVE ALL THE NEGATIVE ITEMS ON MY REPORT, MY SCORE WILL BE PERFECT

The truth is, there are a number of factors that determine your credit score, and simply removing all of the negative items won't give you a “perfect” score. In fact, sometimes removing a negative account can actually damage your score. You see, one of the factors in figuring your credit score is length of history. If you have an account that's several years old and has a late payment or two a few years back, it may be a better idea to leave the item alone.

The important thing to remember when considering repairing your credit is that bad credit can cost you thousands and thousands of dollars in higher interest rates every year. You can repair your credit yourself, and there's plenty of information readily available on the web to help you, and lots of “how-to” books on the subject as well. And, there is always the option of hiring a reputable firm to work on repairing your credit – there's just no replacement for an experienced firm working on your behalf.