11 Credit Report Myths
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11 Common Credit Report Myths:
Myth 1 : Paying my debts will make my credit report instantly pristine
Truth  : A credit report is a history of your payments and not a snapshot of where you re at the moment, so you cannot change the past
Myth 2 : Credit Counseling always destroys my credit score
Truth  : Attending credit counseling is not considered negative in the scoring model.
Myth 3 : Canceling credit card boosts my score
Truth  : Most creditors want to see at least 2 or 3 pieces of active credit to prove you can mange debt responsibly
Myth 4 : Too many inquiries hurt my score
Truth  : If a batch of mortgage or car loan inquiries arrives within 30 days, it doesn’t count at all,
Myth 5 : Checking my own credit report harms my standing
Truth  : The reporting agencies distinguish between soft and hard pulls. When Target calls to check before issuing its line of credit, the agencies chalk that up as a hard pull and it counts against your score. Personal requests and credit counselors — if they do it correctly, so insist on this as part of your agreement terms — fall under soft pulls, which do not reflect negatively on the evaluation
Myth 6 : FICO scores are locked in for six months
Truth  : FICO score changes as soon as data on your credit report change.
Myth 7 : I don’t need to check my credit report if I pay my bills on time
Truth   : Please check because you don’t have any clue about what other activity going on in a particular period
Myth 8 : All credit reports are the same
Truth  : Equifax, Experian and TransUnion are separate companies and the speed in which they update records isn’t necessarily equal.
Myth 9 : A divorce decree automatically severs joint accounts
Truth  : Divorcing parties must contact the creditors for either close current accounts or have the booted name sign a letter of consent for this action
Myth 10 : Bad news comes off in seven years
Truth    : Accounts in bankruptcy can be deleted seven years after the date of your first missed payment
Myth 11 : I can always pay someone to fix or repair my credit
Truth    : Yes, you can clear up erroneous information posted to your account, such as a repossessed car that you didn’t purchase in the first place, but if you paid your Sears bill three months late in 1997, that’s a hard fact.
Resource : Bankrate.com
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Just because FICO updated the newer versions of their scoring software with this 45-day logic (not 30) doesn’t mean that you’ll benefit…yet. If your lenders don’t use the newer FICO score versions—then guess what? That’s right…you’re out of luck.
This is why it’s better to apply for auto loans and mortgages within the same 14-day period. It’s the safest answer…because most lenders are not using the latest and greatest software from FICO, and it’s difficult to find out exactly what version of software lenders are using.
When this does become the standard it will be a good thing. We will have a lot longer to apply for auto or home credit and, overall, our FICO credit scores will be higher because we’ll have fewer hard inquiries and we’ll have a better chance of finding a lower interest rate before we sign on the dotted line.
83rd Carnival of Debt Reduction Webcomics Edition
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[…] 11 Credit Report Myth in Carnival of Debt Reduction # 83 […]