If I had the opportunity to erase from your mind everything you know or think you know about Credit, I would do it for 95% of the country. Too often consumers actually do things in an effort to increase their credit but end up only causing a reverse action and actually realizing a drop in their Credit Score. When it comes to Credit and Credit Scores there are so many Myths, Misconceptions, and just outright bad INFORMATION everywhere you look.
#1 Checking Your Credit Report Will Hurt Your Score
The thought that every time you have your Credit Report pulled (inquiry) you will experience a drop in your Credit Score. This can be true if the Credit inquiry was in relations to a Credit application such as a Credit Card, Mortgage, Car Loan or other forms of Credit. However, if you are pulling your own Credit Report the inquiry will not affect your Credit Score.
#2 There Is Only A Single Credit Score:
There isn’t just one single Credit Score but in fact, there are over a thousand different Credit Score models in existence today. Depending on what type of Credit you are applying for you personally, have dozens or even hundreds of different Credit Scores. Lenders and other organizations pull your Credit Report for various reasons and each category has different formulas that determine your Credit Score. The BEST way to find out what your Credit Score is in relations to the Credit you are Applying for is to find out your TRUE Credit Score. This is the actual Credit Score that your Lender, Credit Card Company, Auto Dealership or Insurance Agency will be accessing.
#3 Closing An Account Will Help your Credit Score:
If you have a credit card that you are no longer using, your most likely to CLOSE the account for a few reasons but don’t think that by doing so it will help your Credit Score. In fact, in many cases, it will actually lower your Credit Score. Credit Scores have an algorithm call your Credit Utilization. This is the amount of credit that you are using in relation to the amount you have available. When you close an account you are causing this ratio to increase therefore that ratio goes up causing your Credit Score to go down.
#4 Paying Off Debt Removes Them:
Paying off a Creditor will show a $ZERO$ balance but the account can stay on your Credit Report for many years. Paying off a loan early or faster than the loan terms does not help your Credit Score. It will help you financially but will not affect your overall Credit Score. However, if you have late payments or have defaulted entirely the negative effects can last from seven to ten years.
#5 Debt is Debt:
Not all Debt is considered equal. A diverse credit mix will result in a better or higher overall Credit Score. Also if you’re applying for a Mortgage loan, your lender will use a Mortgage Credit Score. If applying for a credit card, the lender will use the Credit Card Score. Same goes with Auto and Insurance. Each category has their own Credit Score algorithms. The best way to access ALL of your Credit Scores that your particular lender will use ORDER NOW.
