Five Most Common Credit Myths

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

NOT TRUE! Closing your credit card account adds to the cutting down of credit age, which is also one of the largest bases of your credit rating. Your credit rating, therefore, will not improve even if you do choose to cancel your credit card accounts.

2. Credit scores are increased once you repay your installment loans.

NOT TRUE! Accomplishing installment debts will never improve your credit score. The information with implications on your credit score is not the amount you paid for the loan, but the date you paid off the loan. Actually, credit report agents are only interested in finding out whether you paid for your balance according to schedule or not.

3. You can only have one credit score.

NOT TRUE! Actually, you can receive as many as three credit ratings. Each of the three leading credit report agencies in the US has its own means of preparing your credit score. The calculations achieved by the three companies translate to three credit ratings with diminutive discrepancies. All three credit ratings are accepted by the Fair Isaac Corporation, which is the company that is accountable for the calculation of your FICO credit scores.

4. It is impossible to remove a bad marking from your credit report.

NOT TRUE! A poor mark, may it be a late payment item or an existing loan entry, 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 imprecision of your credit details.

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

NOT TRUE! It is actually the opposite. It is absolutely fine to have credit card activity; but it doesn't affect your credit balance. Keeping a very low balance or no balance at all is actually one of the best means to keep a good credit score and improve it.


Labels: