Five Credit Myths You Should Know About

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 your credit account's age, which is one of the largest determinants your credit rating. Your credit rating, as a result, will not increase once you decide to close your credit cards.

2. You can improve your credit rating by settling your installment loans.

FICTION! Paying back installment loans will not improve your credit score. The information with implications on your credit score is not the sum of money you paid for the debt, but the exact date you paid down the debt. Actually, credit report officers are only interested in confirming even if you took care of your financial obligation before the deadline or not.

3. Only one credit score is issued to you.

FICTION! Actually, you can have as many as three credit scores. Each of the three leading credit report agencies in the country has its own process of calculating your credit score. The estimations achieved by the three agencies result to three credit scores with diminutive dissimilarities. All three credit scores are acknowledged by the Fair Isaac Corporation, which is the company accountable for the preparation 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.

FICTION! A negative mark, whether it is a late payment entry or an existing loan account, can be removed from your credit account. You can do this by requesting a goodwill adjustment from your creditors or by testifying against the inaccuracy of your credit details.

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.

FICTION! It is actually the opposite. It is absolutely all right to maintain credit card activity; however, it doesn't affect your credit card balance. Keeping a profoundly low balance or no balance at all is really one of the most effective means to prolong a good credit score and improve it.


Labels: