Five Most Common Credit Myths

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

FALSE! Canceling your credit card account adds up to the shortening of the age of your credit account, which is included in the largest influences of your credit score. Your credit rating, therefore, will not improve if you do decide to close your credit card accounts.

2. You can increase your credit score by paying down your installment debts.

FALSE! Paying down installment loans will not increase your credit score. The information with influences on your credit rating is not the sum of money you paid for the loan, but the time you repaid the loan. The truth is, credit report agents are only interested in finding out whether you took care of your balance on time or not.

3. Only one credit score is issued to you.

FALSE! The truth is, you can obtain a maximum of three credit ratings. Each of the three leading credit report agencies in the country has its own procedure of calculating your credit rating. The estimations prepared by the three agencies result to three credit ratings with slight discrepancies. The three credit ratings are acknowledged by the Fair Isaac Corporation, which is the organization that is accountable for the calculation of your FICO credit scores.

4. If you get a negative marking on your credit report, then you can never remove it.

FALSE! A negative entry, may it be a late payment entry or an existing liability entry, can be eliminated from your credit report. You can start this by asking for a goodwill adjustment from your lenders or by reporting the imprecision of your credit data.

5. It is possible to improve credit score through the maintenance of your credit account balance.

FALSE! It is actually the opposite. It is perfectly all right to have credit card activity; however, it has no effect on your account balance. Keeping a profoundly low balance or no balance at all is indeed one of the most effective means to prolong an acceptable credit rating and improve it.


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