7 Credit Score Fallacies
7 Credit Score Fallacies
To enhance your credit rating, you need to know the truth about the following fallacies.
The first fallacy states that credit scores have to be paid at all times. You can obtain your credit report for free but this does not take into account the credit score. Actually, you can get free credit score as well.
The second fallacy states that paying off debt from the past stays on your credit report for a longer period of time. Regardless of the date of payment, credit accounts, which include data of your poor financial behavior, stay on your credit report for seven years. On the other hand, accounts dismissed because of bankruptcy are recorded on your credit report for 10 years.
The third fallacy states that you can enhance your credit score by withdrawing credit cards. Canceling any account decreases your overall credit relative to your total debt. Your credit score falls when your debt-to-credit ratio or utilization ratio rises.
The fourth fallacy states that if you have no credit, you will not be able to avail of a credit card. Secured credit cards also allow you to make payments with just a small amount of deposit. You have to pick one that informs your payment history to the three national credit reporting organizations.
The fifth fallacy states that your credit score will decrease if you check your personal credit. Soft inquiry, or checking your personal credit file or credit score, does not reduce your credit score.
The sixth fallacy states that you can boost your credit score by paying an organization. One of the secrets to boost your credit score is to be educated about the factors affecting credit scores and enhance those factors.
The seventh fallacy states that you can improve your credit score if you pay a debt from the past for a smaller amount. This can increase your savings but the consequence is it will decrease your credit score. Instead of “paid in full”, it will appear “settled” in your credit report and this can draw away prospective creditors.
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Filed under: Credit • credit cards • Credit Score • Personal Finance • personal loans
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