Tuesday, April 28, 2009

Clearing myths regarding credit scores and credit reports

I answer several mails a day trying to clear myths of people regarding credit scores. Today I will make an effort to clear some of your myths regarding credit scores and credit report.

Check out some of the myths regarding credit scores and the truth behind it:

Checking your credit report damages credit

This is not true as your credit information does not affect your credit score

If you are not in default, there is no need to check your credit report

You should check your credit report at least once a year to ensure there is no error in it.

Married couples share a credit score

Only in case you have a joint account the credit sores will be similar but every individual maintains a distinctive credit score.

A credit score is a credit report

No, credit report lists your payment and debts whereas credit score is a number assigned between 300 and 850 which is assigned to the record depending on the complex formula.

Shopping for a loan destroys credit

It has a small negative impact on the credit and does not ‘destroy’ credit as claimed by many.

To boost credit fast, just pay off bills

Things don’t change overnight as credit scores will reflect performance over time.

To improve a score, close unused accounts

Not true as closure of unused cards leads to removal of available balances and can actually lower your score.

For a fee, vendors can fix a bad score

Stay away from companies making such claims because when information is verified it would return to the credit report.

I hope I have been able to clear some of the myths associated with credit reports and credit scores

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