<!DOCTYPE HTML PUBLIC '-//W3C//DTD HTML 4.01 Transitional//EN' 'http://www.w3.org/TR/html4/loose.dtd'>; <html><head><title>Article Directory Online : Free Online Article Submission - Articleonlinedirectory | Myths You May Have Heard About Credit Scores</title></head><body><h3>Myths You May Have Heard About Credit Scores</h3><br /><br />By: <br /><br /><p>Created as a formula to determine the odds borrowers will repay loans on time, credit scores are a relatively new invention. Developed in 1988 by Fair Issac Corp, the FICO score condenses information from a credit report into a single number used by banks and creditors to determine the ability of a borrower to take on potential debt and repay it in a timely manner. However, there are many myths surrounding credit reports and scores that have led to much confusion.<br /> <br /> Following are 8 common credit score myths, followed by the myth buster (or truth) of each item:<br /> 1.Paying off debts will instantly boost a credit score.<br /> Myth buster: A credit report and the score assigned an individual are not based solely on a "snapshot moment." In other words, the report represents a history of payments and other credit activity. While it is important to stay on top of debt, it's not possible to completely erase past behavior.<br /> <br /> 2.The best method to boost a score is to cancel credit cards.<br /> Myth buster: This myth contends that open accounts signify potential debt, so it's a good idea to close them. In fact, experts recommend that creditors are interested in seeing two to three pieces of active credit to demonstrate the user can effectively and responsibly manage the debt. While you may be concerned about the $5,000 in credit available on a card not being used, in reality experts are looking at your ability to pay bills on time and not being overextended. However, as with all things, moderation is the key. Opening an account from time to time to take advantage of the 10 percent off discount is understandable, but applying for several at the same time is going to have an adverse effect on a score.<br /> <br /> 3.Numerous inquiries on a credit report will lower the score.<br /> Myth buster: At one time, this myth was true. However, changes in consumerism have affected how credit agencies respond to those shopping around for a good rate. Given society's shopping mentality, a batch of mortgage or car loan inquiries within a 30-day period clearly indicates the individual is considering making a purchase. As a result, there are no repercussions. In fact, the agencies will even go as far as to err on the side of the consumer if an inquiry or two are made outside that window. They still assume the one item is being considered. This is welcome news for the smart-rate shopper looking for the very best deal.<br /> <br /> 4.Checking my credit score can be harmful.<br /> Myth buster: In reality, the reporting agencies can distinguish between a soft and hard pull. An inquiry made by a department store prior to issuing a line of credit is considered a hard pull. This can count against a score. Inquiries made by the credit score-holder are termed soft pulls, and will not negatively reflect on the assessment. The correct way to make this inquiry is directly through the three reporting bureaus. <br /> <br /> 5.Paying bills on time removes the need to check your credit report.<br /> Myth buster: While paying bills on time does affect your score, a majority of consumers' credit reports contain some sort of error, according to experts. These discrepancies can range from an incomplete address to accounts for which an individual never applied. Other files report conflicting information on the number of 60-day late payments made by a consumer. It's the individual's responsibility to check for inaccuracies and get them corrected. Thanks to recent changes in the law, every consumer can access all three credit reports once a year for free. <br /> <br /> 6.I only need to check for mistakes on one credit report because all three contain identical information.<br /> Myth buster: These days most creditors do indeed report to the three reporting agencies: Exquifax, TransUnion and Experian. However, this was not true in the past. And keep in mind that as separate companies, how and when they report the information can vary. Don't assume that all three reports will match exactly. Bet on the fact that you'll find discrepancies in all three.</p> <br /><br /><b>Author Resource:-></b> <a href=http://www.AmericanMomentumBank.com>AmericanMomentumBank.com</a> provides a wide array of personal banking and business banking options and banking solutions tailored to your individual needs. For more information, please visit <a href=http://www.AmericanMomentumBank.com>AmericanMomentumBank.com</a>.<br /><br /><b>Article From</b> <a href='http://www.articleonlinedirectory.com/'>Article Directory Online : Free Online Article Submission - Articleonlinedirectory</a><br /></body></html>
