Myths About Your Credit Score

Myths About Your Credit Score
There are plenty of credit score myths about fico score
ratings that are just floating around and most of them are
just outdated information. Even lenders can give you the
wrong advice, which can get a little confusing. But the
truth of the matter is that bad information can cost you
money no matter, where you get it.

Your Fico score ratings are used for most mortgage lending,
car loans etc. Which means, you will need to know what
will hurt or help your credit score. So to make it clear,
here are some of the most common myths about your credit
score.

* You can lower your credit score, by checking your credit
report.

You can check your own credit report and credit score, as
this counts as a soft inquiry and does not go against your
score. But, 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, which is drastic as every point is important.

A typical 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, try to shop for
a loan within that time frame.

* If you close your old accounts, it will improve your
credit report score

There are times when 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.

If you choose to cancel old credit card accounts it 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 as well.

* 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.

* Getting some Credit counseling will hurt your credit score

Current FICO credit score rating systems in place will
ignore 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 would.

On the contrary, 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.

As 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 a perfect
credit score.

Best way to improve your credit report score is by paying
your bills on time and paying off credit card debt. Check
your credit report regularly for any errors and make sure
you don't fall for these common credit score myths as they
block you enjoy a little financial freedom.

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Mr. Keishon Martin who also writes for
http://www.Newmoneycredit.com which is where you can get
the best self credit repair program on the internet. also
check out http://www.bodyguidepro.com