Five Common Myths About Credit

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

FALSE! Closing your credit card account contributes to the shortening of your credit account's age, which is also one of the largest influences of your credit rating. Your credit rating, as a result, will not improve if you do opt to cancel your credit accounts.

2. Paying back installment loans helps improve credit ratings.

FALSE! Settling installment loans will never improve your credit score. The information that has influences on your credit rating is not the amount you spent for the debt, but the date you repaid the loan. In fact, consumer credit report agents are only interested in verifying if you paid for your debt before the deadline or not.

3. It is impossible to get more than one credit score.If you receive your credit reports from different agencies, then your credit scores will all look the same.You can only get one credit score.

FALSE! The truth is, you can have a maximum of three credit scores. Each of the three major consumer credit reporting agencies in the country has its unique procedure of calculating your credit rating. The estimations formulated by the three agencies result to three credit scores with very little discrepancies. The three credit scores are acknowledged by the FICO, which is the company accountable for the preparation of your FICO credit scores.

4. You cannot erase a negative entry in your credit report before the seven-year requirement expires.

FALSE! A bad entry, whether it is a late payment record or an existing debt entry, can be deleted from your credit record. You can do this by requesting a goodwill adjustment from your loaners or by reporting the imprecision of your credit records.

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

FALSE! It is actually the opposite. It is totally fine to retain credit card activity; but it has no implications on your credit balance. Keeping a substantially low balance or no balance at all is actually one of the best ways to keep a good credit rating and improve it.


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