To make your credit repair journey as safe and easy as possible, there are several things you need to know. They include:
Credit repair does not always require an attorney.
While there's no doubt that an attorney who specializes in consumer's rights can be helpful if there is an invalid judgment or tax lien on your file - especially if it gets to the point of bank accounts or wages being garnished - you can do almost all the necessary negotiation yourself. You'll want to know your rights inside and out, and document everything, but you have a lot more control than you probably realize. When in doubt, there are many places on the internet where you can ask generic (as in, not pertaining to you specifically) legal questions for free.
Bankruptcy does not solve everything.
First, most consumer bankruptcies come with a requirement that you make some restitution to your creditors. Second, when you file bankruptcy, while it does force a legal action wherein those creditors named within it are not allowed to go after you, all those accounts are going to say "included in bankruptcy" on your credit report for several years down the line.
It is possible to have a bankruptcy or foreclosure removed from your credit file after a few years, and in theory they should fall off after a maximum of seven years, anyway, but doing so is extremely difficult. It's usually better to avoid bankruptcy entirely, if you can.
Paying a collection does not always erase its negative impact.
It's almost impossible to repair your credit without satisfying your unpaid debts somehow, but when you pay off an old, delinquent account the status becomes "paid charge off" or "paid, was late," or "paid collection," and resets the clock on the seven year maximum term that such an account can stay on your file.
We are not advising that you ignore old collections, but if you do pay them, you'll want to negotiate with the creditor about how soon they will report that the debt is satisfied, and exactly what they will say. This is one of the times that working with an attorney or credit repair specialist may be helpful.
New good credit will not offset old bad credit.
While it is important to built new, good credit accounts, doing so will not "erase" your bad debt, especially if those debts are recent. In fact, most of the places that give credit never look at the details of your report, they just run your scores and income information through their computers, and let machines make the call.
Since even one or two slow payments (when you do pay your bills, but are often late, or always pay at the very last possible second) can have a negative impact on your credit report, it's best to bring everything current as soon as you can. There are strategies to help you do this, like starting with your smallest account first.
Negative items don't last forever.
It's possible to challenge a debt and have it removed from your credit report. If, for example, you have an old collection and you dispute it based on its age, or the fact that the collection company no longer exists, the bureaus will generally remove it, pending investigation. If the creditor in question does not respond to a bureau's request for information, that bureau will leave it out of your file - there's generally a 30-day to six-month window for this.
Of course, closed accounts, collections and the like are supposed to "fall off" your credit report after seven years anyway, but this does not always happen.
You may find that old debt will come back to haunt you a few months before that seven-year mark. Know your rights. In many states, a creditor may not seek restitution after six years, for example.
Having credit reports pulled can hurt your credit score.
If you have otherwise good credit, and are applying for a mortgage, the one or two reports that might be pulled by competing lenders will not have much of an impact. If you have bruised credit and are applying for several credit cards in the hope that one will approve you, there will be a negative impact. Even when applying for a car or home loan you'll be asked to explain any credit report requests in your file, and confirm whether or not any new debt is associated with them.
Having read all of this, you've probably reached the obvious conclusion: if you take the time to educate yourself, work patiently, and do all the necessary documentation and negotiation, there is almost no negative credit item that requires outside help to be removed from your credit report.
The power of credit repair is in your hands.