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The Top 5 Credit Mistakes
If you're looking to improve your credit, you've probably
heard a million suggestions on how to go about it. Some
advice may be right, but a lot may be wrong. What should
you believe?
I'm here to help clear up the confusion. Below are
five of the most common misconceptions about credit.
Get to know the facts, and it'll be a lot easier to
keep your credit happy and healthy. So, the top five
credit misconceptions are...
#5: Closing old accounts will improve your credit
score Not true. The key word here is "old."
When you close old accounts, you shorten your credit
history. And that can actually lower your credit score.
If you want to close your accounts, be sure to start
with the newer accounts first. This will help keep your
long established credit history on your credit reports.
#4: Co-signing a loan doesn't make you responsible
for the account Wrong. If you open a joint account or
co-sign a loan, any activity on those accounts will
show up on your credit report. For example, if you co-sign
a car loan for your brother and he misses a payment,
that will show up on your credit report. Think of any
joint account or co-signed loans as your own account.
#3: Paying off a negative record will get it
removed from your credit report Not quite. Negative
records such as collection accounts, late payments and
bankruptcies can stay on your credit report for 7-10
years—even if you pay it off. But let me point
out that paying off your debts is still a smart move
because they will be marked as "paid" on your
credit report. Lenders may look more favorably on your
credit report if your debts are paid. Of course, the
big improvement will happen when the negative record
expires.
#2: Paying off a debt will make your credit
score jump up 50 points right away This one's not true
either. Here's why: credit scores are calculated with
so many different factors and values that it's hard
to say exactly how many points you can gain—or
lose—by doing one thing. Every person's situation
is different. The fact is, there's no one quick fix
to perk up your score. Instead, doing things like paying
on time...reducing your debts...and making sure your
credit report is accurate are the recipe for a stronger
credit score.
And the number one credit misconception is...
#1: Checking your credit reports will lower
your credit score Heck, no! Checking your credit reports
on a regular basis is one of the best ways to monitor
your credit and lessen the damage of identity theft.
When you check your own credit report, it won't affect
your score. However, an inquiry will appear when a lender
or creditor looks at your credit reports because you're
applying for a loan or credit. Keep those applications
to a minimum and you'll be in good shape.
Author: Elena Laramie
TransUnion's TrueCredit.com empowers consumers to manage
their credit health, providing information on credit-related
issues that range from the significance of a credit
report to identity theft protection. TrueCredit.com's
offerings include educational materials, free monthly
newsletters and online products, including credit reports,
credit and insurance scores, credit monitoring, debt
management tools and identity theft insurance services.
Keywords : credit report, credit scores, truecredit,
TransUnion, credit monitoring, credit crunch, insurance
score, id theft, credit improvement, credit history,
improving credit
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