Someone's credit score is an integral part of his finances. Many institutions and individuals often look at your credit score, from banks, credit unions, utility companies, landlords, insurance companies and perhaps your employer. According to the results of a recent survey, half of Americans don't exactly understand how their credit scores are derived, or what elements are used to compute those 3 vital figures. Here are five familiar myths about credit scores.
Myth No. 1 - The Big Credit Bureaus Use Different Formulae When Calculating Credit Scores Perhaps on of the most the most common myths about credit scores. The reality is that the big credit institutions, from Experian, Equifax to TransUnion, all have a different term for the same score. TransUnion for instance, calls it the Empirica, while Experian gives it the label Experian/Honest Isaac Risk Model. While these major companies have different names for the credit score, they still apply the same formula for coming up with it. As the scores used by the major credit companies are basically the same, lenders often use just one credit report to analyze your loan application.
Myth No. 2 - To Rebuild Your Credit Score, Just Re-Pay All Your Debts. The fact is that your credit score will be heavily affected, and dictated by your past credit payment history, and not by your current amount of debt. While you might be as we speak quickly paying-off your credit card debts, and taking care of all other outstanding obligations, your past history of late or missed payments will have an effect on on your score. As the credit professionals often tell us, it needs time to repair your credit score.
Myth No. 3 - Shutting Down Old Accounts Aids In Boosting Your Credit Rating. This myth's nothing, but delusional. The truth is that closing old accounts will not impact your credit score, but opening more accounts will definitely hurt your credit rating. Having too many accounts damages your credit score, as your score is usually affected by the difference between the available credit and the credit that's being used. Closing old accounts only helps to make your credit report look young and fresh, but the damage has already been done before.
No.4 - Loan Shopping Damages Your Credit Score. When someone makes an inquiry concerning your credit score, the score can drop by as much as 5 points. Some people frequently fear that if they look around for new loan, each occasion the lender makes an inquiry, their credit score drops once more. The fact is that several loan inquiries are by and large treated as a single inquiry, provided they are made within a 45-day period. It would be beneficial if you do your loan rate shopping during that forty five day window.
No. 5 - The Loan Company Can, At A Small Cost, Fix The Credit Score. No organization can take action to improve or change your credit score especially when it's filled with lots of information about you not managing your debts properly. The only way to improve your credit report, is by demonstrating that you can manage your debt repayments well in the future.
To enhance your credit score, you need to do 4 things: Reduce your debt load, Pay all bills regularly, Remove any errors from your credit report, and apply for credit once in a while.
Myth No. 1 - The Big Credit Bureaus Use Different Formulae When Calculating Credit Scores Perhaps on of the most the most common myths about credit scores. The reality is that the big credit institutions, from Experian, Equifax to TransUnion, all have a different term for the same score. TransUnion for instance, calls it the Empirica, while Experian gives it the label Experian/Honest Isaac Risk Model. While these major companies have different names for the credit score, they still apply the same formula for coming up with it. As the scores used by the major credit companies are basically the same, lenders often use just one credit report to analyze your loan application.
Myth No. 2 - To Rebuild Your Credit Score, Just Re-Pay All Your Debts. The fact is that your credit score will be heavily affected, and dictated by your past credit payment history, and not by your current amount of debt. While you might be as we speak quickly paying-off your credit card debts, and taking care of all other outstanding obligations, your past history of late or missed payments will have an effect on on your score. As the credit professionals often tell us, it needs time to repair your credit score.
Myth No. 3 - Shutting Down Old Accounts Aids In Boosting Your Credit Rating. This myth's nothing, but delusional. The truth is that closing old accounts will not impact your credit score, but opening more accounts will definitely hurt your credit rating. Having too many accounts damages your credit score, as your score is usually affected by the difference between the available credit and the credit that's being used. Closing old accounts only helps to make your credit report look young and fresh, but the damage has already been done before.
No.4 - Loan Shopping Damages Your Credit Score. When someone makes an inquiry concerning your credit score, the score can drop by as much as 5 points. Some people frequently fear that if they look around for new loan, each occasion the lender makes an inquiry, their credit score drops once more. The fact is that several loan inquiries are by and large treated as a single inquiry, provided they are made within a 45-day period. It would be beneficial if you do your loan rate shopping during that forty five day window.
No. 5 - The Loan Company Can, At A Small Cost, Fix The Credit Score. No organization can take action to improve or change your credit score especially when it's filled with lots of information about you not managing your debts properly. The only way to improve your credit report, is by demonstrating that you can manage your debt repayments well in the future.
To enhance your credit score, you need to do 4 things: Reduce your debt load, Pay all bills regularly, Remove any errors from your credit report, and apply for credit once in a while.
About the Author:
Learn more about credit builder credit cards. Stop by Graham Bailey's site where you can find out all about how do credit cards work.
0 komentar:
Post a Comment