Five Most Common Credit Myths

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

FALLACY! Closing your credit card adds up to the cutting down of your credit account's age, which is one of the primary determining factors of your credit rating. Your credit rating, as a result, will not improve once you choose to close your credit card accounts.

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

FALLACY! Paying off installment liabilities will not improve your credit score. The detail with effects on your credit rating is not the total amount of money you spent for the debt, but the particular day or time you settled the debt. Actually, consumer credit report agents are only interested in verifying even if you paid for your loan before the deadline or not.

3. Only one credit score is issued to you.

FALLACY! The truth is, you can have as many as three credit scores. Each of the three leading credit report agencies in the country has its own means of preparing your credit rating. The data achieved by the three companies translate to three credit scores with slight dissimilarities. The three credit scores are acknowledged by the Fair Isaac Corporation (FICO), which is the institution accountable for the calculation of your FICO credit scores.

4. If you get a negative marking on your credit report, then you can never remove it.

FALLACY! A negative mark, may it be a late payment item or an existing debt listing, can be deleted from your credit record. You can initiate this by requesting a goodwill adjustment from your lenders or by disputing the imprecision of your credit data.

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

FALLACY! It is actually the opposite. It is totally okay to have credit card activity; however, it has no effect on your credit card balance. Keeping a remarkably low balance or no balance at all is really one of the most effective ways to maintain a good credit rating and improve it.


Labels: