Five Common Myths About Credit

1.  Canceling credit cards helps increase credit scores.

NOT TRUE! Canceling your credit card account adds to the cutting down of your credit account age, which is also one of the largest determinants your credit score. Your credit rating, therefore, will not increase if you do decide to close your credit cards.

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

NOT TRUE! Settling installment liabilities will not increase your credit score. The detail with influences on your credit rating is not the sum of money you paid for the debt, but the time you settled the loan. In fact, consumer credit report agents are only interested in identifying whether you paid for your financial obligation on time or not.

3. It is impossible to get more than one credit score.If you receive your credit reports from different agencies, then your credit scores will all look the same.You can only get one credit score.

NOT TRUE! In reality you can obtain as many as three credit scores. Each of the three leading consumer credit reporting agencies in the country has its own means of preparing your credit rating. The computations prepared by the three companies result to three credit scores with slight discrepancies. All three credit scores are accepted by the FICO, which is the organization that is accountable for the preparation of your FICO scores.

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

NOT TRUE! A bad entry, whether it is a late payment record or an existing liability listing, can be deleted from your credit record. You can start this by requesting a goodwill adjustment from your creditors or by testifying against the inaccuracy of your credit records.

5. You can improve your credit by holding your credit card balance.

NOT TRUE! It is actually the opposite. It is entirely fine to have credit card activity; however, it doesn't affect your account balance. Keeping a particularly low balance or no balance at all is really one of the most effective means to preserve an acceptable credit rating and improve it.


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