Most Common Credit Myths

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

NOT TRUE! Closing your credit card account contributes to the shortening of the age of your credit account, which is included in the biggest clinchers your credit score. Your credit score, therefore, will not increase if you do choose to close your credit card accounts.

2. Paying back installment loans helps improve credit ratings.

NOT TRUE! Paying back installment loans will never increase your credit score. The detail with implications on your credit rating is not the total amount of money you repaid, but the date you paid back the loan. Actually, consumer credit report agents are only focused on determining if you settled your loan on time or not.

3. Only one credit score is issued to you.

NOT TRUE! In reality you can have up to three credit ratings. Each of the top three consumer credit reporting agencies in the country has its unique procedure of preparing your credit rating. The calculations formulated by the three organizations result to three credit ratings with slight dissimilarities. The three credit ratings are acknowledged by the Fair Isaac Corporation, 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.

NOT TRUE! A negative entry, may it be a late payment entry or an existing loan item, can be eliminated from your credit record. You can start this by asking for a goodwill adjustment from your creditors or by reporting the inaccuracy of your credit records.

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

NOT TRUE! 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 indeed one of the best means to preserve an acceptable credit rating and improve it.


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