Credit Score Myths

By Doherty • June 14th, 2011
Credit cards

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Why do lenders need your credit score? Basically, a FICO (Fair, Isaac and Company) credit score is a number that companies granting credit use to assess an applicant’s risk. In other words, it gives them an idea or a snapshot on how well you will be able to repay the loan that they are considering of giving you. According to the Credit Education Center, about 65 percent of your credit score is based on your payment history, which includes payments on your credit cards and loans, and the amount of money you owe on your accounts. This score can affect whether you get a loan or credit card so, it is good for you to know the common myths that hinder you especially from pursuing your dream of purchasing or getting a home loan for a home.

1. I Have to Pay a Fee every time I check my Credit Score – Before making any purchase or making a loan application, you need to know your credit score and some are reluctant to do so because they think they have to pay to every time they need to find out about their credit score. This is a myth. Yes, you have to pay but it’s going to be only a small one time payment free to and checking your score will definitely not pull your score down.

2. A Credit Repair Company can improve my score – Definitely not the best way to improve your score. A credit repair company by definition is an organization that helps you to manage your finances better and offers you assistance to improve your credit score through various ways like checking the accuracy of your credit reports with the credit bureaus, settling any credit report dispute as it arises, repairing credit in the wake of bad debts, and so on. However, this is not the best way to improve your score. You can pay your bills or monthly mortgage payments on time, lower your balances, and reduce the number of credit card accounts that you have.

3. My Bad Credit record Will Never Change – Of course not. Having foreclosure and short sale notes on your credit report can last for years, but they will disappear once you have made some improvements on your credit like paying down credit cards and paying all of your bills on time.

4.Using credit card more often will build good credit rating – Wrong! It’s actually even better if you’re not going to use your credit card at all rather than using it and risk your score by not being able to pay on time, which can definitely ruin your credit score.

We need to play the game by the rules. We need to be informed of the rules and just like in making purchases or getting a home loan for your dream home at homes in Buckeye AZ, you need to know the facts as well as the myths in order to get the best deal.

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