Credit Repair Myths – These Won’t Fix Your Credit Reports
Fixing your credit and increasing your credit score takes patience and a transparent understanding of the ways that actually create a difference. Both are going side-by-side, fix all the negatives on your credit report, and your credit score will go up. It’s like peas and carrots, tea and honey, bread and butter, you cannot have one while not the other.
Sorry to say, but, there’s no trick to fixing your credit overnight despite what you hear from a number of those fly-by-night credit repair companies. The key to increasing your credit score may be a good payment history along with some time and a healthy mix of credit types. Here are some beliefs that may NOT help you build good credit.
Closing All previous Accounts can Boost Credit Score
Closing previous accounts usually will not increase your score and will probably hurt your score. Closing previous accounts can shorten your credit history and leave you with a smaller amount of accessible credit. The length of credit history shows how seasoned a borrower you’re, therefore the more positive experience you’ve, the better. Having more available credit helps to stay your utilization rate low. The utilization rate is what quantity of available credit a borrower uses; the lower the percentage, the better.
Opening Credit Card Accounts can Increase My Score
Wrong! Some individuals believe opening a bunch of recent credit card accounts is going to be proof that they will handle credit. Actually, it’s the other impact. A creditor can surprise why this person wants all of this credit and can interpret this as a symptom of a high-risk borrower. What the creditor can see could be many hard inquiries on your credit report, which have a negative effect on your credit score.
Paying Off Delinquencies can restore My Credit
Well yes, however not as much as you may expect. Though you pay off the delinquencies, late payments, charge-offs, or collection accounts, they’ll all still be shown on this account with a zero balance. The trick to this is to have the creditor or collection agencies agree to take away the delinquency in exchange for you paying off the account. See our article on pay for a Delete for additional info on these debt settlement strategies.
Paying Before the Due date can Help a Credit Score
Paying a credit card balance fully ten days or someday before the due date can help your credit score. However, if you pay off the balance before the statement limit, your report can post a zero balance for that account that successively can help your utilization rate, or what proportion of credit you’re using. Details on how Paying before the due date can help a credit score explain in our article Life Hack to Boost Credit Score.
All Delinquencies are the same
If you find yourself in the precarious position of only having enough cash at the end of the month to pay off a number of debts, make sure you select those to pay wisely. Having a thirty or sixty-day late payment on a mortgage or personal loan affects your credit score more than say a late payment on a credit card. Of course, any late payment is unhealthy however if you’re in between a rock and a hard place, pay your mortgage and auto loan on time, if you can.
Eliminate All Negatives on Credit Reports
In a perfect world, this could be a good thing to accomplish, however, generally, there are some negatives that simply won’t come off. Rest assured, having many older dings won’t crash your credit score as long as you have got some smart credit-building techniques going on along with your newer accounts. Older accounts have less “weight” than newer accounts thus keeping the newer ones current is extremely vital to increasing your credit score.
What we have learned
Building good credit and increasing your credit score will be shrouded in mystery and myth, however, keeping some straightforward rules of thumb in mind can keep you on the proper path. Do not assume fixing your credit goes to happen overnight because it will not. Always maintain a consistent payment history, diversify your accounts, and keep your balances low. Follow these straightforward rules and your credit score will increase and your credit history can improve.