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Credit Score Facts and Myths

There are many sources talking about credit scores - Internet, newspapers, T.V., and even word-of-mouth, so sorting out the facts from the myths is essential. It's a fact that your credit score is one of the most important numbers in your life. Why? Your credit score (which is calculated from your credit report) is significant because it can determine key life events like whether you are able to buy a house, get a new car, or land a good job.

Most people would agree that those are very important life events. So, it's no myth that knowing what is true and what is false about your credit score can positively influence your future.

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Will Checking Your Credit Report Impact my Score?

One of the first myths that stops many from reviewing their credit report is the fear that checking their report will negatively impact it. This is false. In fact, by law you can obtain three free credit reports per year from the major credit reporting agencies. They are:

  • Equifax
  • TransUnion
  • Experian

A fourth major credit scoring agency exists which is smaller and less known called Innovis.

Is My Score is All That Counts?

Though your credit score may seem god-like in its influence on your financial life, it's a myth that it is the only means by which you are granted good credit risk status. For instance, your employment and your credit history are also considered. Additionally weighed into lending decisions is how well you manage your debt with respect to your particular income level.

It is conceivable that with a lower credit score but strong employment history and good income to debt ratio, you could receive a loan or credit from a lender. The contrary is also possible if you only possess a high credit score but are weak in the other areas.

Does Applying for a New Credit Card Lower My Score?

It's not necessarily a fact or a myth that applying for a new credit card will lower a credit score. Your credit score could drop if you apply for a new credit card, but it may not. If it does, the amount will be little. The key to remember is not to make numerous credit applications within a short time span. These show up on your credit report as "inquiries" and may be interpreted as a flag marking financial trouble. On the other hand, when it comes to mortgage or auto lenders, multiple inquiries are expected and typically treated as one inquiry.

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Credit Score - Dead or Alive?

True, your credit score doesn't breathe and have a pulse, but in many ways it is like a living being because it's a fact that it is constantly changing. The good news with this is that when you pay your bills on time, use no more than 25% of your available credit, demonstrate good credit behaviors over time, don't apply for multiple credit cards in a short period, and use various forms of credit, you inject your credit score with life in a positive way. And your score will go up! So, don't believe the myth that your credit score is static.

Is Closing Old Credit Accounts a Good Way To Raise My Score?

Though closing old credit accounts might seem like a smart way to raise your credit score, it's a myth. In fact, closing old accounts could actually lower your score! Yes, we all want to banish low credit scores, but the longer your credit history is the better your score can be. By closing accounts you shorten your credit record and possibly reduce the total percentage of your available credit.

Contesting Erroneous Credit Information Removes It From My Report?

Though you can take action to have inaccuracies fixed in your credit report, it's a myth that you are guaranteed they will be considered incorrect and changed. However, it's a fact that checking your credit reports often is the first step to insuring accuracy. It is also a fact that you have the right to file a form with any or all credit agencies disputing possible mistakes in your report. The particular credit bureau(s) has thirty (30) days to reply. credit monitoring services can assist you to change, increase and keep your credit score high by separating fact from myth. The truth is that your good credit score is a powerful tool in helping you attain some of life's most prized possessions such as a house, a good job or a new car.

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