Five Most Common Credit Myths

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

MYTH! Canceling your credit card account adds to the cutting down of your credit account age, which is also one of the largest clinchers your credit score. The credit scores on your records, for that reason, will not increase even if you do opt to cancel your credit card 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.

MYTH! Paying back installment loans will never increase your credit score. The factor with effects on your credit rating is not the amount of money you paid for the debt, but the exact date you paid down the debt. Actually, consumer credit report agents are only concerned with knowing whether you settled your debt according to schedule or not.

3. Having only one credit score is natural.

MYTH! Actually, you can have up to three credit scores. Each of the three major consumer credit report agencies in the country has its own process of preparing your credit rating. The figures prepared by the three agencies result to three credit scores with minute dissimilarities. All three credit scores are recognized by the Fair Isaac Corporation (FICO), which is the institution responsible for the calculation of your FICO scores.

4. Negative entries, unless the seven-year requirement is up, are never erased from your credit report.Removing negative entries from your credit report is impossible; especially if the seven-year requirement is yet to expire.

MYTH! A poor marking, may it be a late payment listing or an existing liability account, can be deleted from your credit report. You can do this by asking for a goodwill adjustment from your loaners or by disputing the imprecision of your credit data.

5. Holding your credit balance helps increase your credit score.

MYTH! It is actually the opposite. It is entirely all right to maintain credit card activity; however, it has no effect on your credit card balance. Keeping a substantially low balance or no balance at all is really one of the best means to maintain an acceptable credit rating and improve it.



Labels: