We’ve all heard the same rumors from our neighbors, relatives or friends. There are plenty of myths about what you should do and not do to improve your credit and your credit score. Finally, we throw some light on these myths! We will exposed these “urban legends” to give you the truth and all the truth about credit:
1. Your score will suffer a drop if you check your own credit history – fortunately, this rumor is completely false. Checking your own profile and credit score is considered a “soft inquiry” that does not cause any harm to your credit history. You might want to check your credit rating for a number of reasons. Not sure if this is the right time to open an account at a place like http://fr.partycasino.com/, or intend to take a second mortgage. Understanding your credit score now actually can be a good way to gain a better understanding of your personal finances. Only, those made, when you apply for credit “normal applications”, from a creditor or lender can reduce your credit score a few points .
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2. Closing old accounts will improve my credit score – close or not close, that is the question. Many people claim that the closure of your accounts or your older inactive accounts is a good way to improve your credit reputation. In most cases, however, the closure of accounts has the opposite effect. Canceling old credit accounts can lower your credit score by giving the impression that your credit history are less developed. Before closing the oldest account, think twice. If you want to reduce the amount of credit available to you, ask for a reduction of your credit limits or close newer accounts.
3. Once you settle a debt, it disappears from your credit report – negative entries, such as collect accounts, bankruptcies and late payments, remain on your credit report for 6 to 7 years. The fact that one has to pay before the end of its expected life does not disappear from your credit report, but instead that the account is marked “paid.” It’s still good to pay off your debt: this can improve your credit score. But, in fact, the remarkable improvement occurs only at the expiration of registration.
4. Be co-signer does not make you responsible for an account – when you open a joint account or you co-sign a loan, you accept the legal responsibility of the account. Any activity in shared accounts, good or bad, comes to be in the credit profile of two people. If you co-sign a car loan for a friend and that he lacks to make his payments, his actions will cause harm to your credit, and vice versa. The only way to stop these “double registration” is to refinance the loan or ask the creditor to officially remove your name.
5. The repayment of a debt will add 50 points to your credit score – your credit score is calculated based on a complex algorithm taking into account hundreds of factors and values. It is very difficult to predict how many points you can win by changing a single factor. For example, for a person whose credit score is high, even one late payment can cause a significant drop. However, for a person whose credit score is low, the same late payment might not cause a significant drop. There is no “magic bullet” to improve your credit score. Just keep paying your bills on time, reduce your debts and removing negative inaccuracies in your credit profile. A good financial behavior and the passage of time are the two most important factors for your credit score.
FACT: There are three main credit agencies (Equifax, TransUnion and Experian), each of which is independent and tracks of your credit history. This means that you actually have three credit profiles.
FACT: You can check your credit report as often as you like without having a negative effect on your credit score.
Checking your own profile is considered a soft inquiry, which does not affect your credit history. The demands of lenders and creditors – are standard requests – can lower your score a few points.
FACT: The negative files remain on in your credit profile up to seven years, even if you pay off the debt.
You have finally paid off this account. Why he remains so in your profile? There remain for at least seven years, but it will be marked “Paid.”
REALITY: Check your profile and credit score once a year is not enough. Think of your credit as the weather: as time, it can change daily. Of course, you do not check the weather only once a year! The reality is that to manage your credit, you should check your credit report regularly. A good way to do this is to have a credit monitoring product.
You now know the reality behind these common urban legends. But be on your guard: there are many others, moving around!
