Five Most Common Credit Myths

1.  You can improve your credit score by canceling your credit cards.

FALLACY! Closing your credit card account adds up to the cutting down of the age of your credit account, which is one of the biggest influences of your credit score. The credit scores on your records, as a result, will not increase once you opt to cancel your credit accounts.

2. Paying back installment loans helps improve credit ratings.

FALLACY! Paying down installment loans will never increase your credit score. The factor that has implications on your credit score is not the total amount of money you repaid, but the exact date you repaid the debt. In fact, credit report officers are only concerned with determining if you paid for your balance on time or not.

3. It is impossible to get more than one credit score.If you receive your credit reports from different agencies, then your credit scores will all look the same.You can only get one credit score.

FALLACY! The truth is, you can have a maximum of three credit ratings. Each of the top three credit reporting agencies in the US has its own means of calculating your credit score. The computations achieved by the three companies result to three credit ratings with slight differences. All three credit ratings are acknowledged by the FICO, which is the organization that is accountable for the calculation of your FICO credit scores.

4. You cannot erase a negative entry in your credit report before the seven-year requirement expires.

FALLACY! A poor marking, may it be a late payment entry or an existing loan item, can be erased from your credit record. You can start this by requesting a goodwill adjustment from your creditors or by reporting the imprecision of your credit report.

5. If you hold your credit card balance, then your credit score will improve.You can improve your credit by maintaining your credit card balance.

FALLACY! It is actually the opposite. It is totally all right to retain credit card activity; however, it has no implications on your credit balance. Maintaining a very low balance or no balance at all is indeed one of the most effective means to prolong an acceptable credit score and improve it.


Labels: