A person’s annual credit report, and subsequently the credit score or rating gleaned from it by the credit bureau, directly affects his or her ability to apply for a credit or a loan from different financial institutions.
Credit scores and ratings will have a strong effect on how creditors and lenders will view your credit worthiness, but your credit history may have more bearing on your potential employer who will want to assess your ability to manage financial assets.
Below are some common myths about credit reports and credit scores:
1.) If you close a credit account, it will help you improve your score.
It won’t. It will even hurt it because old credit accounts that are being maintained will mean that you are paying them responsibly for a long period of time.
2.) If you open a lot of credit accounts, then these accounts will help improve your score.
This is also a very common myth. Money lenders will infer from the simultaneous opening of credit accounts that a certain consumer needs money so badly that several credit lines needed to be applied for in order to make ends meet. Opening a lot of accounts will deduct directly from your credit score, because each time an individual opens a credit line, a hard inquiry is made on the credit report by the creditor or the institution where you are getting your loan from.
3,) If you check your credit score periodically, you risk the chance of hurting it.
Checking and getting credit reports will have no effect on your credit score. As a matter of fact, you have three different ways to get them every year. Getting your credit report is free because it is mandated by the law. Obtaining a copy of your annual credit report regularly is even helpful in catching identity theft cases. Plus, it will have the added benefit of your knowing how you can improve your credit score.
4.) Canceling offers from credit card companies will help improve the credit score.
Every time you opt out of credit card offers, you are simply lessening junk mail sent to your address. These credit inquiries generated from credit card offers are soft inquiries that will have no effect on your credit score.
5.) If you want to restore your credit score, then you must pay your outstanding balances.
Paying off a delinquent balance will only rid you of the financial obligation. The delinquency mark will remain on your record. These delinquent activities that negatively affect the credit score are delayed payments, accounts sent to collection agencies, charged-off accounts, and declarations of bankruptcies.
6.) All delinquent payments have the same effect on the credit score.
Any delays in mortgage and car loan payments count more than a delayed credit card payment. Mortgage and car loans weigh in heavily on your credit score.
7.) If you pay before the due date of a bill or a loan, it will help tremendously improve your credit score.
Paying ahead of the due date is a maneuver that will not work in improving a credit score because the account balance has already been reflected and reported to the credit or loan agency. But if you pay ahead of the statement date, then that will give a zero balance on your account and thus enhancing your utilization rate or the amount of credit you are utilizing. This will give a boost to your credit score. Most importantly, paying on time is what really counts.
8.) The credit reports and credit scores are the same regardless of where you get them.
This is not true. The three credit reporting agencies or credit bureaus, namely Equifax, Experian, and TransUnion, work independently of each other and they never share their data. You may use this important fact to closely compare and keep an eye on your credit reports (from the three major credit bureaus) and all the possible errors or disputes that may arise from them.
9.) A credit report is not important if you know you have good credit history.
The law gives every American the right to request a free copy of their annual credit report from the Federal Trade Commission (FTC). Obtaining copies of your credit reports and analyzing them periodically will safeguard you from identity theft, and if suspected, then you can address it right away by filing a police report and notifying your creditor.
10.) A perfect credit score is not possible.
The perfect 850 credit score is just around the corner provided you always pay your bills on time and you have just the right mixture of credit and good debt, like student loans.
11.) If you are married to someone who has a bad credit score, then you must expect that will negatively affect yours.
This is only true for joint accounts.
12.) Employers will check the credit scores of their potential applicants.
This depends on the job you are applying for. Also, according to a 2010 statistical report, roughly 13% of companies do credit report checks on their job applicants.
13.) Employers will only look at the bad credit score and not the reasons behind it.
Employers checking on their applicants care a lot and are usually very thorough. There are instances, especially if you have impressive credentials, when you even get called to explain how you got the bad credit score.
14.) Employers and criminals are searching for the same information on your credit report.
Also, be careful! Some fast credit repair services and some credit monitoring services may even perpetuate these misconceptions to prey on unwary consumers.
Click Here for the Top Rated Credit Repair Program.
Credit scores and ratings will have a strong effect on how creditors and lenders will view your credit worthiness, but your credit history may have more bearing on your potential employer who will want to assess your ability to manage financial assets.
Loading ...
