ICFE eNEWS #16-25 - August 5th 2016
View this eNEWS online
The Top 10 Credit Report Myths Debunked
By Jim Garnett, a/k/a Ask Mr.G, a member of the ICFE's Board of Educational Advisors
To have misunderstandings about our credit report can result in lower
credit scores and higher interest rates. Therefore, it pays to get it
- Credit Reports Are Expensive And Hard To Obtain. You can get a credit
report from each of the three credit reporting companies once a year
absolutely free at AnnualCreditReport.com.
- Checking My Credit Report Hurts My Credit Score. Checking your own
credit report is called a "soft inquiry" and can be done as often as you
wish without negatively affecting your credit score.
- Unless I Know There Is A Problem, There Is No Reason To Check My
Credit Report. Checking our credit report yearly can prevent credit
problems the same way checking our oil or tires can prevent car
problems. The Federal Trade Commission reports that 1 in 5 Americans has
an error on his credit report, and 20% of those who find an error will
see their credit score increase. So, check your report once a year.
- Getting Married Will Merge Our Credit And Create A "Joint Credit
Report." Not so. Both partners will continue to have their own
individual credit reports and scores. Any "joint" accounts will appear
on both reports, and the management of those accounts will affect both
partners' credit scores.
- One Cannot Have A Good Credit Score Without Maintaining Balances On
His Accounts. Credit scores are not improved by carrying balances on
accounts. Lenders are more interested in seeing that you pay your debts
in a timely manner (35% of your score is based on payment history).
Improve your credit score, without going into debt, by purchasing a
small item on your credit card each month and paying it off in full when
the statement arrives.
- Disputing Negatives On My Report Will Boost My Score. Any negative
being disputed is noted as "disputed" on your report for 30-45 days. If
you win the dispute, the negative item disappears forever and your score
may increase. If you lose, the negative item returns. Thus, there is no
long-term score increase simply because you dispute negative items. In
fact, be careful not to dispute too many negative items at once or the
credit bureau may throw out your claim as "frivolous."
- Becoming A Co-Signer Will Not Affect My Credit Score. Any debt for
which you co-sign is just as much your debt as the person for whom you
signed. Any default on that debt, and the credit score of both the
signer and co-signer will be adversely affected, plus legal action can
be taken toward both.
- Paying Off Negative Debts Removes Them From My Credit Report.
Although paid off bad debts may not continue to adversely affect our
credit score, the record of it having occurred can remain on our report
for seven years before it drops off. Some credit reports will list a
"drop off date" of those items listed.
- I Must Have A High Credit Score Because I Do Not Use Credit. Our
credit score is tabulated from the history of how we have used credit
during the past seven years. Lenders see that pattern of that usage as a
predictor of future use. If we have no history of credit usage, we may
be required to produce alternative proofs such as utility receipts, bank
accounts, and assets to establish creditworthiness.
- Closing Old Accounts Will Increase My Credit Score. Doing so may
inadvertently have the opposite affect since part of our credit score is
based on the length of our credit history. Normally, the longer, the
© Jim Garnett, The Debt Doctor
AskMrG Consulting, LLC
2216 SW 35th Street
Ankeny, IA 50023
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