Five Credit Myths You Should Know About

1.  You can improve your credit rating by closing your credit card accounts.

FALSE! Closing your credit card account contributes to the cutting down of your credit account age, which is also one of the primary decisive factors of your credit score. Your credit rating, as a result, will not increase once you opt to close your credit cards.

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.

FALSE! Accomplishing installment liabilities will not increase your credit score. The information with effects on your credit score is not the amount of money you paid for the loan, but the particular day or time you repaid the debt. In fact, consumer credit report agents are only concerned with finding out even if you took care of your balance before the deadline or not.

3. You can only have one credit score.

FALSE! The truth is, you can get up to three credit ratings. Each of the three leading consumer credit report agencies in the US has its own process of calculating your credit score. The computations achieved by the three companies translate to three credit ratings with very little dissimilarities. The three credit ratings are accepted by the FICO, which is the institution responsible for the calculation of your FICO credit 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.

FALSE! A bad mark, whether it is a late payment item or an existing liability account, can be erased from your credit report. You can do this by asking for a goodwill adjustment from your creditors or by disputing the imprecision of your credit data.

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

FALSE! It is actually the opposite. It is perfectly fine to maintain credit card activity; but it has no implications on your account balance. Keeping a very low balance or no balance at all is indeed one of the most effective ways to preserve a considerable credit score and improve it.



Labels: