Five Credit Myths You Should Know About

1.  Credit ratings are improved if you closed your credit card accounts.

FICTION! Canceling your credit card adds to the shortening of credit age, which is also one of the primary clinchers your credit score. The scores on your credit report, as a result, will not improve if you do decide to close your credit accounts.

2. It is probable to improve credit rating through the repayment of your installment debts.If you pay off your installment loans, then your credit rating will improve.

FICTION! Paying back installment debts will never increase your credit score. The detail that has effects on your credit score is not the amount of money you paid for the debt, but the date you repaid the debt. Actually, consumer credit report officers are only concerned with knowing even if you paid for your balance before the deadline or not.

3. You can only have one credit score.

FICTION! The truth is, you can get as many as three credit scores. Each of the top three consumer credit reporting agencies in the country has its own means of calculating your credit score. The data achieved by the three companies result to three credit scores with slight differences. All three credit scores are recognized by the Fair Isaac Corporation, which is the organization accountable for the preparation of your FICO scores.

4. You can never remove a negative entry in your credit report until the seven-year requirement is up.

FICTION! A negative entry, whether it is a late payment listing or an existing debt account, can be erased from your credit report. You can do this by asking for a goodwill adjustment from your loaners or by testifying against the inexactness of your credit records.

5. You can improve your credit by holding your credit card balance.

FICTION! It is actually the opposite. It is absolutely okay to retain credit card activity; however, it doesn't affect your account balance. Keeping a remarkably low balance or no balance at all is absolutely one of the most effective means to maintain a favorable credit score and improve it.


Labels: