Common Credit Score Myths

A lot of credit score myths about fico score ratings get spread around and some of them are just outdated information.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 supplied by 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 to: http://www.credit-repair-facts.com/article s_1.html

---

What Does Your Credit Score Tell You?

When you apply for a loan or a mortgage, the... Read More

Annual Credit Report and Free Annual Credit Report

Getting an annual credit report review has been the advice... Read More

The Right Way To Credit Repair

If you have a bad credit rating, then you might... Read More

The FICO Score Misconceptions

There are many misconceptions about credit scores out there. There... Read More

Free Credit Report ? Watch Out for Scams

Many people may still not be aware of an amendment... Read More

Credit Score - Reporting Your Financial Health

Credit score is one of the most basic, determining factor... Read More

Applying for Credit Cards Online

In the olden days, about 10 years ago, before the... Read More

Getting Your Credit Report and Understanding Whats On It

If you intend to apply for a loan, you need... Read More

How To Choose Your Credit Card Application

The articles and tips provided on this site are intended... Read More

SuperCharged Secret 4, Credit Card Utopia

YOU SCRATCH MY BACK, AND I'LL BUY SOME MORE BEER!Let's... Read More

How To Establish Great Credit

Building a good credit history is important. If you have... Read More

Some Truth About Credit

Credit is currently and has been historically an integral component... Read More

Credit Cards or Store Cards - Which Is Better?

Introduction In this article, a presentation is made of the... Read More

Taking Control of Your Credit History

Your credit history is important; in fact, in this day... Read More

Credit Report Secrets: Do You Know What They Reveal?

If you've ever applied for a credit card or loan,... Read More

Beware the Shopping Mall Monster

Like me, you've probably been offered a fair old number... Read More

Finding and Applying for the Right Credit Card Offer Online

Anywhere you go online nowadays, you will see a multitude... Read More

What Is the Fair Credit Reporting Act and What You Should Know About It

The Fair Credit Reporting Act (FCRA) and the recent update... Read More

ChexSystems: Who They Are and How it Affects You

ChexSystems is a company that maintains a subscriber membership service... Read More

10 Ways of Reducing the Risk of Identity Theft

1- Check your credit report regularly2- Secure personal information in... Read More

Easing Your Financial Burdens With Credit Counseling

It is a well-publicized fact that more of us are... Read More

The Best Strategy To Erase Credit Card Debt

Credit card debt is a growing sickness in the United... Read More

A Summary of the Fair Credit Reporting Act

This summary of the Fair Credit Reporting Act will explain... Read More

Credit Report ? How Your Credit Score is Determined

Most consumers are aware that they have something known as... Read More

Credit Help for Real Estate Financing: Credit Scores

When you buy real estate, lenders run all of the... Read More

Cutting Credit Card Costs

What are the APRs charged by the credit cards in... Read More

7 Compelling Reasons Why A Prepaid Debit Card May Be Just The Financial Tool You Need

Prepaid debit cards are great financial tools and may be... Read More

What is a Bad Credit History?

A bad credit history can sometimes seem like a curse...... Read More

Credit Repair Services vs. Do-It-Yourself Credit Repair

Millions of Americans suffer because of bad credit these days,... Read More

How To Prevent Fraudulent Credit Card Transactions

What Are Possible Signs of Fraudulent Transactions see at Web... Read More

Credit Damage: Getting Compensated for Your Loss

Until recently lawyers for victims of credit damage had little... Read More

Beginners Guide to Credit

I remember back when I was 18 and completely oblivious... Read More

Save Money and Lower your Payments by Improving or Repairing Your Credit

Having a better credit score not only represents easier access... Read More