3 Credit Score Myths
The credit score a certain persona is indicative of his financial standing. Many agencies, on a regular basis, look at your credit score, from banks, credit unions, utility firms, landlords, insurers and even employers.
Myth 1
The Major Credit Bureaus Make Use Of Various Formulas In Coming Up With A Credit Score
This is considered to be the most common among all. Truth of the matter is, the major credit bureaus, from Experian, Equifax to TransUnion have a different term for the same score. TransUnion, say, calls it the Empirica, while Experian calls it the Experian/Honest Isaac Risk Model. They may have different names for the credit score, but they make use of the same formula in computing it. While the names used by the major credit companies are essentially the same, lenders often use just one credit report, to analyze your loan application.
Myth 2
Merely Paying Off All Your Debts Will Instantly Repair Your Credit Score
Your credit score will always be affected by your past credit history, and it’s not about your present debt. You can quickly pay off your credit card debts and settle any other outstanding obligations, but our previous history of late or missed payments will still reflect on your score.
Myth 3
Closing Old Accounts Helps Boost Your Credit Report
This is delusional. Closing old accounts will never have an impact on your credit score, but opening these old accounts will surely hurt your score. Having too many accounts also incurs damage to your credit score, because your score is typically affected by the difference between the available credit and the credit being used. Closing an old account will make your credit report look new, but the damage is done.
Categories: Credit Score Articles Tags: closing, Credit History, Credit Rating, Credit Score, credit score myths, history, look, used
Believe It Or Not: The Credit Score Version
Nowadays, people value their finances a lot. One of the most fundamental part of which is the credit score. Whenever you are applying for something, the offices and agencies actually take time to look into your credit scores. These credit scores may come from your previous and present bank accounts, insurance companies, lenders, credit unions and other firms of such. However, statistics show that majority of the society is still half blinded by the real meaning of a credit score. Some are facts while others are just hearsay Here is a rundown of what they consider as myths when it comes to credit scores. Let us identify which ones are real and which ones are not.
The first myth says that most credit bureaus use various ways in calculating a credit score. This is one of the most common. But the truth is that, the only difference is the term they use to call the computing system. The formula itself is the same for all major companies. The second myth says that you can fix your credit score by just paying all your existing debts. How convenient would that be right? However, that is not the case. Yes it would be better to settle your credits but your past accounts will remain intact. The credit history will reflect on your current standing. This will show how you are as a payer. The third myths says that closing down previous accounts will enhance your credit report. This is downright pointless. Closing ancient accounts would not even have a tinge of effect on your credit score. But opening them up would cause major damage. Having numerous accounts that are not going all too well is definitely bad news for the credit companies. And last but not the least, the fourth myth says that for a minimal fee, a loan company can cure your sick credit score. Wrong again. No credit bureaus are capable of fixing your problem for you.
The only way up here is not to look back to your poor credit history but rather show the credit companies that you have learned from the past and that you are now ready to become responsible in handling your account in the future.
Categories: Credit Score Articles Tags: Credit Score, credit score myths