 |
Common Credit Score Myths
A lot of credit score myths about fico score ratings get
spread around and some of them are just outdated information.
Sometimes even lenders can give you the wrong advice and it can
get confusing. But the bottom line is bad information can cost
you money no matter who you get it from.
Fico score ratings are used for most mortgage lending, which
means, you need to know what will hurt or help your credit score
points. To make it clear, here are some of the most common credit
score myths.
* Checking your credit report will hurt your credit score
Checking your own credit report and credit score counts as a
soft inquiry and does not go against your score. However, if
anyone else like a lender or credit card company is checking your
credit report, this is considered a hard inquiry and will
generally knock off about 5 credit score points.
The credit score rating system treats multiple inquiries in a
14-day period as just one inquiry. The system ignores all
inquiries made within 30 days prior to the day the credit score
is computed. So if you want to minimize the damage from credit
inquiries, shop for a loan in that short period of time.
* Closing old accounts will improve your credit report
score
Sometimes even lenders will tell you to close your old and
inactive accounts as a way for improving your credit report
score. In most cases, closing old accounts will actually have the
opposite effect with the current credit score rating system.
Canceling old credit accounts can actually lower your credit
score because it makes your credit history appear shorter. If you
want to reduce your levels of available credit, it's better to
reduce or close new accounts instead. Applying for new credit is
more likely to lower your score.
* You need to check more than just FICO score rating
If you ever hear this from anyone, consider it a red flag. All
of the three major credit reporting bureaus offer FICO credit
score ratings using the formula developed by Fair, Isaac. Even
though each one gives the scores a different name you only need a
fico score rating from the three major credit reporting
bureaus.
At Equifax, the FICO score rating is called the Beacon credit
score. At TransUnion, it's called Empirica. At Experian, it's
known as the Experian/Fair, Isaac Risk Model.
The reason each of the three major credit reporting bureaus
will have three different scores is because they don't all share
the same data. So when checking your credit report, just make
sure it comes from the three major credit reporting bureaus:
Experian, Trans Union and Equifax.
Examine your credit reports from all three major credit
reporting bureaus before you apply for a big loan like a
mortgage. Fix any errors in all three reports before you shop for
a loan because it takes time to correct your credit report.
* Credit counseling will hurt your score
The current FICO credit score rating system ignores any
reference to credit counseling that may be in your file. The
researchers at Fair, Isaac, the company that created the FICO
credit scoring rating system, found that people getting credit
counseling didn't default on their debts any more often than
anyone else.
However, any late payments you've had with creditors will hurt
your credit score. Credit counseling can hurt your ability to get
a loan because you probably have had trouble paying
creditors.
Some lenders will back away if you are in credit counseling.
Others may see it differently, but usually will charge you higher
interest rates than if you had perfect credit.
The best way to improve your credit report score is paying
your bills on time and paying down credit card debt. Check your
credit report regularly for any errors and make sure you don't
fall for these common credit score myths.
Copyright © 2005 Credit Repair Facts.com All Rights
Reserved.
This article is supplied by http://www.credit-repair-facts.com
where you will find credit information, debt elimination programs
and informative articles that give you the knowledge to correct
your own credit and credit report. For more credit related
articles like these go to: http://www.credit-repair-facts.com/articles_1.html
MORE RESOURCES:
SEC finds shortcomings in credit ratersReuters - 16 hours agoWASHINGTON (Reuters) - Credit rating agencies did not properly manage their conflicts of interests when assigning ratings to structured products such as ... |
Credit - Google News
|
|
|
RELATED ARTICLES
10 Step Credit Repair
Guide
The process of clearing credit can be laborious and
frustrating, but your efforts will be paid for in better
financing. Your rights are protected by laws, but you need
to take reasonable actions toward your goal of clearing
credit discrepancies.
Secured Credit Cards-
Consumer Tips
Whether you have no credit or damaged credit, secured
credit cards are a good tool for building a good credit
history.Several months ago Tom, a member of CreditBoards.
Choosing The Credit Card
That Is Right For You
Credit cards represent an important part of our financial
lives. Having the right credit cards is essential and will
make a big difference to your finances.
How did a Thief get my
Name? Don't be a Victim of Identity Theft
How do these people get my name? If you have a credit card,
your name is sold to third parties, if you do not want this
to happen, you must contact your credit card companies to
inform them that you do not want your information sold.
Check the privacy notice that comes with your bill.
Do You Know The Top Five
Credit Card Mistakes?
When you're dealing with credit cards, you're playing with
fire. Unfortunately, there are plenty of people out there
who don't realise that, and make all sorts of dangerous
mistakes with their credit cards every day.
Reward Credit Cards: Get
the Best Rewards Card Incentive Program
A good credit reward card can contribute to your retirement
account, offer gas rebates, score theme-park or vacation
tickets or take thousands off the price of your next auto
purchase. Rewards at hotels, airlines, and retailers bring
more to the possibilities but, adds to the confusion.
The Three Largest
Factors In Your Interest Rate
There are three major factors that affect how much you pay
for a loan. Understanding these factors can save you time,
money and frustration.
How To Repair Your
Credit Report
A credit report is run on a buyer when he or she needs to
buy something that will take a long-term loan, such as an
automobile or a house. The credit report can come from one
of three agencies - Equifax, Experian, and Trans Union.
Is Your Credit Score
Costing You Money?
Most of us want a good credit report to obtain automobile
financing, credit cards, and to purchase a home. But,
beyond these consumer loans, your credit report can cost
you in everyday living expenses.
Common Credit Score
Myths
A lot of credit score myths about fico score ratings get
spread around and some of them are just outdated
information. Sometimes even lenders can give you the wrong
advice and it can get confusing.
4 Steps You Can Take If
Your Online Credit Card Application Has Been
Refused
Help! I've Been Turned DownYou received an envelope in the
mail with a great offer for a low interest credit card. You
read all the details, even the boring small print and
decided that this card fit your needs to a tee.
Free Credit Reports Now
Available From the FTC
The Federal Trade Commission (FTC) has set up a new website
(www.AnnualCreditReport.
Will Inquiries Lower
Your Credit Score?
What are inquiries?When you apply for credit the creditor
or lender checks your credit report to verify that you
qualify for the credit or loan you are applying for. The
"inquiry" is then reported to the credit bureaus and shows
up on your credit report.
What is a Bad Credit
History?
A bad credit history can sometimes seem like a curse..
Automobile Credit
Report
When applying for a loan to purchase a car, the lender will
want to take a look at a person's auto credit report.
Credit reports tell lenders all they need to know about
granting a loan to all applicants.
Free Credit Reports -
How to Maintain Your Credit Profile
Maintaining your Credit ProfileEvery consumer should be
maintaining their credit profiles to ensure the highest
scores possible. To do so, you must first order your credit
reports from the three major credit bureaus: Equifax, Trans
Union, and Experian.
Bad Credit? No Credit?
Yeah, Its a Problem.
Many companies use the slogan "Bad Credit? No Credit? No
Problem!" The truth is that it is in fact a problem and
there is no easy way to correct it. It takes a lot of time
and effort to obtain credit when you do not have any and
even longer to fix bad credit.
10 Ways To Protect Your
Financial Identity Being Used For Someone Else's Shopping
Spree
Someone impersonating you could be spending your
hard-earned money.Impossible! Not really, check, loan, and
identity fraud are a real problem.
Establishing Credit -
What You Need To Know Part 1
Establishing credit is one of the most important things you
can do in order to add stability to your financial record
and dramatically increase your ability to borrow necessary
funds in order to purchase a new home, new car or even pay
for college expenses. Unfortunately credit has two sides to
it that consumers can exploit.
Various Types of Credit
Cards - Part 2
Several different types of credit cards offer several
different options, depending on what your needs are. Some
are geared toward individual consumers while others are set
up in ways that work best for small business needs.
|
|
