There are lots of myths about credit score and if you believe them you can spoil your credit. Therefore, know the credit myths to improve your credit score.
Check your Credit Report to Reduce your Credit Score
Checking your own credit report is known as soft enquiry and it never goes against your score. Your credit scores get deducted only when a lending agency checks your score. Usually 5 points will come off your credit score in such a case.
Multiple inquiries made within a 14-day period are treated as one enquiry by the rating system. The credit rating system overlooks all inquiries made 30 days prior to the day, credit score is computed. Therefore, shop for a loan within this short period of time to minimize the damage, if any, from credit inquiries.
Close your Old Accounts to Improve your Credit Score
Nothing can be further from the truth! In fact closing your old accounts will actually decrease your credit score because it will make your credit history shorter.If you want to improve your credit score, it is better to pay off the balances of new accounts and close them.
Do Not just Check FICO Score Rating
How many times have people told you that you need to check more than just the FICO score rating? This is totally wrong. There are three major credit reporting bureaus- TransUnion, Experian, and Equifax. They all use the formula developed by Fair, Isaac to compute the FICO score. It is just that at Equifax it is known as Beacon credit score, at TransUnion it is called Empirica, and at Experian, it is called Experian Fair/Isaac Risk Model.
You should look at your credit report from all these three bureaus and the errors, if any, in the reports, before you shop for a loan.
Credit Counseling will reduce your Credit Score
FICO score does not look at any reference to credit counseling, because researchers have found that people getting credit counseling do not default on their payments any more than anyone else.
Credit counseling can hurt your chances of getting a loan, because it indicates that you have had trouble paying your debts earlier. Some lenders might give you a loan but at a higher interest rate.
So, ignore the myths about credit score and put in concerted efforts to maintain a good credit score. If you are determined to do so you will surely succeed.