Five Common Myths About Credit

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

MYTH! Canceling your credit card influences the cutting down of credit age, which is one of the biggest influences of your credit rating. Your credit rating, as a result, will not increase even if you do opt to close your credit accounts.

2. Paying back installment loans helps improve credit ratings.

MYTH! Paying down installment loans will not improve your credit score. The information with effects on your credit rating is not the amount you paid for the loan, but the date you paid back the loan. The truth is, credit report agents are only interested in finding out whether you paid for your loan before the deadline or not.

3. Having only one credit score is natural.

MYTH! The truth is, you can get a maximum of three credit ratings. Each of the three major credit reporting agencies in the country has its own means of computing your credit rating. The figures prepared by the three companies translate to three credit ratings with slight differences. The three credit ratings are recognized by the Fair Isaac Corporation (FICO), which is the organization that is responsible for the calculation of your FICO scores.

4. You can never remove a negative entry in your credit report until the seven-year requirement is up.

MYTH! A poor mark, whether it is a late payment item or an existing debt listing, can be eliminated from your credit report. You can initiate this by asking for a goodwill adjustment from your creditors or by testifying against the imprecision of your credit records.

5. Credit scores are increased if you hold your credit account balance.

MYTH! It is actually the opposite. It is totally all right to have credit card activity; however, it has no effect on your credit card balance. Keeping a particularly low balance or no balance at all is actually one of the best means to maintain a considerable credit rating and improve it.


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