Most Common Credit Myths

1.  Credit ratings are improved if you closed your credit card accounts.

NOT TRUE! Closing your credit card influences the cutting down of credit age, which is also one of the biggest determining factors of your credit score. The credit scores on your records, therefore, will not increase if you do opt to close your credit card accounts.

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

NOT TRUE! Accomplishing installment debts will not improve your credit score. The factor with effects on your credit rating is not the amount of money you spent for the loan, but the time you paid back the debt. The truth is, consumer credit report officers are only interested in finding out whether you paid for your debt before the deadline or not.

3. Only one credit score is issued to you.

NOT TRUE! Actually, you can obtain a maximum of three credit scores. Each of the three leading credit reporting agencies in the country has its own method of calculating your credit rating. The computations achieved by the three agencies result to three credit scores with very little discrepancies. All three credit scores are accepted by the Fair Isaac Corporation (FICO), which is the organization that is responsible for the preparation of your FICO credit scores.

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

NOT TRUE! A negative mark, may it be a late payment record or an existing debt account, can be erased from your credit record. You can initiate this by asking for a goodwill adjustment from your lenders or by reporting the inaccuracy of your credit report.

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

NOT TRUE! It is actually the opposite. It is absolutely fine to maintain credit card activity; however, it has no effect on your credit balance. Maintaining a profoundly low balance or no balance at all is absolutely one of the best means to maintain an acceptable credit rating and improve it.


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