A good friend of mine and regular contributor to the Mr Credit Radio show, Mike Watson a/k/a Credit Repair Mike, brought this article to my attention earlier this week. I love to see published articles about Credit Scoring because I know they will get at least a few things wrong. While this article was no different, it did create some pretty good talking points for today’s show. Read the article here: 7 Credit Myths that won’t die
Listen to todays Podcast commercial-free here:
Credit Score Myth # 1: “If you handle your finances responsibly, your credit scores will take care of themselves.”
Nothing in the world of your credit score takes care of itself. The most important thing to do is educate yourself about the items that do in fact effect your credit score. For example, missing a payment on your cable bill or being late 30 days on your cell phone do not impact your credit score. It will, however, if those accounts go to collections. Education is key, which is why we provide all the free resources through Credit Repair Mike.
Credit Score Myth # 2: “Checking your credit hurts your credit scores.”
This is only true if you are applying for credit or getting your credit report from a Creditor. If you pull a report on your own through a 3rd party site or AnnualCreditReport.com, it will not hurt your credit score.
Credit Score Myth # 3: “Asking for lower limits will help your credit.”
I never knew this was a myth? Do people really think this? According to MSN Money they do. Fact is, higher limits will help your credit score.
Credit Score Myth # 4: “You need to carry a credit card balance to have good scores.”
You don’t need a balance, but you need “activity”. Activity is when you do anything that generates a monthly statement. So buying something or making a payment will generate a statement and that’s all you need. You can buy an item on Tuesday and pay it off electronically later that same day and you’re good. No balance on your card or interest paid, but activity for your credit score.
Credit Score Myth # 5: “You should never close an account if you can help it.”
This is actually true, so they totally got it wrong. Not a myth at all! There is never a benefit to closing an account. If it’s a positive account, then your credit score will drop in 6 months when there is no longer that positive account showing activity on your credit report. If it’s a negative account, then it won’t matter if it’s opened or closed. Either way, it can’t help you to close an account.
Credit Score Myth # 6: “How you handle credit indicates how trustworthy you are.”
This is one of those perception-is-reality things. If you think getting a nose-job will make you look better and therefore more confident, then it will. Your credit score does not say anything about who you are as a person. The Banks would love for you to think it does, but it doesn’t. However, a lot of people believe it does. Some people keep their heads in the financial sand for years because they are ashamed of their credit report. Hey, if it matters to you that much, take steps to correct it. Contact Credit Repair Mike today. 619.734.9454 – Whatever you do, don’t let them win by throwing in the towel.
Credit Score Myth # 7: “All credit scores are pretty much the same.”
In fact, they are almost ALL different. Especially the free credit score stuff you get online. A lot of those scoring models are totally different than what is used in the real world of credit. However, there are so many different types of legitimate scoring models, it’s getting tough to keep them straight! There are models for auto financing, mortgage financing, insurance, etc. So, it depends on what you need your credit score for to know which model you should be referencing.
Hope it helps! Have a great weekend 🙂