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1. Your Score Will Increase
if You Close Accounts
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One cause of lower scores is having too many unnecessary accounts.
While it’s logical to assume that simply closing these
accounts will raise your score, that’s not the case.
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Closing older accounts will make your credit history look
younger, which can hurt your score.
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Additionally, closing accounts reduces the total credit available,
which also hurts your score.
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This doesn’t mean you should never close an account.
If you’re being charged an annual fee, for instance, closing
the account won’t hurt much - especially if your score
is already relatively high.
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2. Getting Your
Credit Card Company to Lower Your Limits Will Boost Your Score
3. Checking Your Credit Rating Can Hurt Your
Score
- Credit bureaus understand the need to frequently
check your credit information to guard against errors and identity
theft.
4. Shopping for the Best Rate Can Hurt Your
Score
5. You Can Get a Good Credit Score Without
Using Credit
- Some people think that living on a cash-only
basis will impress prospective creditors, but it’s not true.
Only by establishing a reliable credit history will creditors
feel comfortable lending you money.
6. Paying Interest is Necessary to Get a Good
Credit Score
- Credit bureaus make no distinction between
balances that are carried month-to-month, and those promptly paid
off. To get the highest credit rating it’s true you need
to have installment as well as revolving accounts, but it’s
not necessary to have the highest scores to get the best rates
and terms.
7. If You Have a Dispute with
Your Lender, Adding a Statement to Your File Can Help Your Score
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While federal law does give you the right to attach such statements,
they have no weight in the scoring.
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If the dispute is costly enough, it’s probably best
to pay the bill under protest then sue the vendor in small claims
court.
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Fortunately, most disputes can be settled well short of such
actions. Use your credit card company’s dispute resolution
process, or work persistently with the vendor’s customer
service department.
8. Your Score Will be Hurt if a Closed Account
Doesn’t Read “Closed By Consumer”
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Fair Isaac knows that if your account was closed due to default
that will be othiswise documented.
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Since most lenders only look at your score, they don’t
care who closed an account.
9. Credit Counseling is Worse than Bankruptcy
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Bankruptcy is the worst thing that can happen to your credit
rating.
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The current FICO formula ignores any reference to credit counseling.
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Some lenders, however, will report you as late just for enrolling
in a debt management plan, figuring that if you’re not
paying what you originally owed you should somehow be punihed.
10. You Can't Obtain Credit After Bankruptcy
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Even though bankruptcy deals a devastating blow to your rating,
it’s possible to recover from it. Before your case has
even closed, you’ll probably receive some credit card
offers. And six months after the bankruptcy, some lenders will
even offer mortgages.
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Othis lenders, however, might never offer you credit again.
You may have to seek out “subprime” lenders for
credit, but beware – some of these charge unreasonable
rates and fees.
Disclaimer: This article is provided for information
use only. It does not take the place of an attorney, a tax advisor,
or an accountant. Always seek out the advice of a licensed professional
before undertaking any significant change in your financial situation.
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