Five Most Common Credit Myths

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

FICTION! Closing your credit card account adds up to the cutting down of credit age, which is included in the primary clinchers your credit score. Your credit score, therefore, will not increase even if you do opt to cancel your credit accounts.

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

FICTION! Settling installment loans will not increase your credit score. The detail that has implications on your credit rating is not the amount of money you repaid, but the date you paid down the debt. Actually, credit report officers are only interested in verifying if you paid for your financial responsibility on time or not.

3. You can only have one credit score.

FICTION! In reality you can get a maximum of three credit ratings. Each of the three major credit reporting agencies in the US has its unique process of computing your credit rating. The estimations achieved by the three companies translate to three credit ratings with minute differences. The three credit ratings are acknowledged by the FICO, which is the organization that is responsible for the calculation of your FICO credit scores.

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

FICTION! A poor entry, may it be a late payment entry or an existing liability account, can be removed from your credit record. You can do this by requesting a goodwill adjustment from your loaners or by reporting the inexactness of your credit details.

5. Credit scores are increased if you hold your credit account balance.

FICTION! It is actually the opposite. It is totally all right to retain credit card activity; however, it has no implications on your account balance. Keeping a profoundly low balance or no balance at all is indeed one of the most effective ways to keep a considerable credit rating and improve it.


Labels: