Five Credit Score Myths

As I have discussed before in a previous
post about Past _due _imgcredit scores
, your credit score is made up of
numerous pieces of credit data from your credit report.  It
considers both positive and negative information compiled on you
and is the driving force behind what type of credit you are
granted.  Consumers nationwide have a hard time understanding
the basic principles of a credit score and as a result believe the
myths that are circulating. Below is a list of five common credit
score myths with an explanation of the real facts to set you on the
straight and narrow.    

Myth 1: A low credit score will follow you

In fact, the contrary is true.  Your credit
is a temporary picture of how you fairing financially at
one particular point in time.  Your score is constantly
changing based on the balances of your accounts, your payment
history, your credit applications, etc.  While improving
your score
will not happen overnight, the more time spent
making timely payments and paying down balances, the faster your
score will rise.  Older negative information is less
detrimental to your score, so as you continue to keep abreast of
your finances, your previous mistakes won’t hurt you. 

Myth 2:  Your credit score alone determines whether
or not you are granted credit 

Your credit score is one of several pieces of information used to
make the decision whether or not to extend you credit.  In
addition to your credit score, potential lenders look at your
employment history, your income and your credit history.  It
is the compilation of all of your information that is utilized to
make a decision on whether or not to grant you credit and at what
interest rate.  

Myth 3:  Applying for new credit will hurt my
credit score

Applying for new credit won’t harm your score unless you go to the
extreme in shopping around for credit.  You are correct that
every time you apply for credit it affects your score, but nothing
too drastic if you are reasonable in submitting applications. 
A credit
will affect your score only a minimal amount. 
Multiple inquiries piling up with begin to have an affect.

Myth 4:  Checking your credit report hurts your

Fact is, checking your credit score is actually a good
thing.  While your score may be affected from having a third
party review your
credit report
, you are entitled to review your report at any
time or as many times as you wish without a penalty.  Checking
your report regularly is a good idea so you are aware of what is
reporting and can clear up any mistakes before it is too

Myth 5:  Cancelling your credit cards will boost
your score

Experts agree that creditors want to see open active accounts to
show you are financially responsible.  The reality is that
paying your bills on time every month and not being overextended is
more important for your score than having an available and unused
credit line. 

If you are having issues with your credit
or have any questions about your report, contact SmithMarco P.C. for a free case