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outdated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
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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
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