CREDIT MYTHBUSTER: The truth behind the report

Knowing what affects your credit score helps you better prepare for the future. Whether buying a home, car, or a applying for a credit card. The truth is, what some of your family or friends say about checking your credit, closing credit card accounts, and paying rent and utilities regularly will have a negative or positive effect on your credit score/report may be a long time myth that you buy into. When I think of credit reports I think of all of my consistency(or not) when paying my bills and have thought, Whoooa my credit is going up! Unfortunately, not all good habits are reported and bad habits are ALWAYS being reported, never missing a beat! Educating yourself about how to increase your credit by small daily habits and knowing what really is hurting you will provide clarity and not so much fear. After all, knowing where you stand with your credit report and facing it head on will create awareness when deciding to make a big purchase  like a home, car, or just starting fresh with building your credit. 

Myth #1: Get Familiar with your Credit Report

Periodically checking your credit report will help avoid any fraudulent charges. Keeping you in the driver’s seat of your financial security. This added security does not affect you negatively.

 

Myth #2: Leaving a Zero balance

Don’t think twice about cutting up those Old Cards. Leaving a Zero Balance and Active will only improve your Credit because of the Duration of History the Card remained Open.

 

Myth #3: Consult with a Financial Professional

You should always pay your debts and it doesn’t hurt to talk to a Counselor about plans to do so.

 

Myth #4: Be a Cautious Co-Signer

Although we love your family and friends… Co-signing for them can end you up in deep waters. Loaning your name out holds you Fully Responsible for 100% of that debt.

 

Myth #5: Rental History vs Credit History

Rental and Living expense paid regularly are NOT counted towards giving you good credit. However, NOT PAYING your monthly dues such as Rent, Utilities and Cell phone bills on time will negatively affect your credit. Always pay your bills on time! Not all things will report positively but not paying them will always report negatively.

 

Myth #6: At a Glance Scoring

Your risk is only assessed a “glimpse at a time”. With that being said your credit Score has nothing to do with your Current Regular payment trends.

Six Bad Credit Myths

I have to have debt to establish credit.
Myth: I have to have debt to establish credit.
Fact: Building your credit does begin with opening a loan or line of credit. But you do not have to be constantly in debt to build your credit. In fact, it will look a lot better to creditors and lenders if you’re able to pay off your balances (or keep them below 30% of their limits) each month.
Medical Debt doesn't affect my credit score.
Myth:Medical Debt doesn’t affect my credit score.
Fact: In the eyes of the credit bureaus, debt is debt. It’s important to pay off all your debt instead of being negligent and letting it get out of hand. Late payments and collections will be reported just as they would be for a loan or credit card.
Checking my credit report will damage my score.
Myth: Checking my credit report will damage my score.
Fact: When you request your credit report what is done is called a soft inquiry; it doesn’t have any effect on your history or score. You can check your credit report any number of times (once from each bureau for free) a year without any damage. Keep in mind that when a lender or creditor pulls your credit, though, it does have a small, but negative, effect on your score.
My Spouse and I share our credit score.
Myth: My Spouse and I share our credit score.
Fact: You may share last names, your house, and maybe even the car, but not your credit score. This myth comes from fact that shared credit cards and loans will equally affect both credit scores whether you pay on time or miss a payment no matter who is responsible for making the payments. Remember to check both people’s scores before applying for joint loans or credit cards.
Closing old credit accounts is good for my credit score.
Myth: Closing old credit accounts is good for my credit score.
Fact: Your accounts’ ages affect your credit score. The longer the better. Old accounts show you can maintain your credit and monthly payments. It leads creditors and lenders to believe you’re less likely to make mistakes that those new to credit may make.
Closing old credit accounts is good for my credit score.
Myth: Closing old credit accounts is good for my credit score.
Fact: Your accounts’ ages affect your credit score. The longer the better. Old accounts show you can maintain your credit and monthly payments. It leads creditors and lenders to believe you’re less likely to make mistakes that those new to credit may make.

In the end, knowing these simple Credit Mythbusters will build more confidence when deciding on that big purchase or if you need to build yourself up again. If you need more information or want to know if you can qualify for a home purchase, I will lead you on a path even if its 12 months down the line. We’ll create a custom plan for you and connect you to the best lenders to go over proven strategies to increase your credit and talk about your debts to pay to increase your loan amount. Leave it to the professionals to save you money and most importantly, save you time.

For all your Real Estate needs: Buying and Selling- you can email me anytime Rolanda@RachelAdamsGroup.com

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