When it comes to credit, we hear all sorts of stories so often we come to believe them. Be careful though, there are many folk tales or myths out there regarding credit. Its good to stay informed. Let’s review some of these myths, shall we:
• “Closing your unused credit cards will boost your credit scores.” This is not true, closing credit cards accounts can cause your credit score to drop. If your credit card account is not reflecting late payments, has a debt ratio of 10% or lower, and has been open for over year then the account is actually helping you in at least 80% of your credit. Closing such accounts can dramatically lower your credit scores!
• “Paying off your collection accounts will remove them from your credit reports.” Paying off a collection account or bad debt will not ensure that the account gets removed from your credit report. In fact, most cases the account will simply be updated as a paid collections account but may remain on your credit report for up to 7 years.
• “Paying your bills on time will give you a good credit score.” Remember your payment history is ONLY 35% of your entire credit score. Making your payments, although helping your credit, will not ensure a good credit score. There are other factors to consider which also weigh in when calculating your credit score such as debt-ratios, length of credit history, etc.
• “Credit just leads to debt, you’re better off just paying everything off in cash.” Having good credit will provide benefits that you do not get with cash. Paying cash may sound like a good idea unless, but who really has $300,000 to pay cash for a home or even $40,000 for a car in cash? To qualify for a loan, especially for these 2 types of purchases you need to have good credit.
These are just a few of the things we tend to hear more often than not. All being, not true. Credit can seem a little complicated but once you really learn about it and learn to understand it. It’s becomes very simple. Knowing and understanding what is true and not true regarding your credit will truly help you. You will be able to see your own credit and know what to do to maintain a good score or fix it if you are struggling with it. If you’re still unsure about other things you may have hear regarding your credit, we can help!
A Goal without a Plan is just a Wish. Give us a call TODAY at 844-FIX-URCR or click on the following link com to schedule your FREE consultation and create your personalize plan to achieve your credit and debt GOALS!
*Individual results may vary. Please call for more details and to discuss your own individual situation.