Repairing your credit report by debunking myths
Repairing credit report should be one of your resolutions for the New Year. Every lender
and creditor demands for your credit file, which has to be spotless to boost credibility.
The credit statement is checked when you are out to search for a new job, loan or
insurance. It is now reviewed to determine the risk of an individual. So, it has become
necessary to clean your statement and dispel the myths about the credit scores.
Here are myths that lower your scores and make the credit report spotty.
1. Closing old accounts: Getting rid of the old account may actually cut down your
credit history which plays a big role in the calculation of credit scores. There is no
doubt that it is good to have old credit history. Closing the accounts badly hinder
one’s potential utilization rate, this is measured between the available credit and
spendings. One should always utilize less credit.
2. Opening more accounts: It is true that credit score is boosted by opening up new
accounts on some occasions, but numerous accounts is harmful. More account
openings will lend an individual a greater and favorable utilization rate, but at the
same creditors will suspect about too much need of credit.
3. Paying the unpaid: Idea of paying off the old debts is good but one should be
aware that "late payment," "charge-off" and "in collection" remarks will be
present on your credit report. But it can be removed by asking your creditors to
remove them as a condition for paying the unpaid.
4. Paying before due date: It is a good idea to pay the balance in advance or before
the due date. But this responsible behavior will not make any difference in the
5. Taking all delinquencies as same: Delinquent debts ruin the grades and one
should never have it; also some debts are less harmful than others. Paying late on
mortgage or car payments will have huge impacts over the credit file than paying
late on credit cards.
Be aware of the latest updates taking place in the credit market, as the factors that impact
on the grades today may not affect the future. Exposing oneself to wrong information will
never help you to boost the scores. Instead, avail of a free credit report from the reporting
agencies to look for ways to uplift your scores.