Fact or Fiction? Having never borrowed money, I must have an excellent credit score. Fiction. Without a credit history, you don’t give the credit bureaus any information with which to provide FICO to generate a credit score. You must build your credit report profile for short and long term credit scoring strength.
Fact or Fiction? – I have a bankruptcy, lien and/or a charge off on my credit report. No one will ever lend me money or extend credit to me, again. Fiction. While each of these items is damaging to your credit report, the negative effects of these and other items lightens up over time. A bankruptcy can stay on your credit for 7 to 10 years, depending on which chapter you file. A charge off can only stay on your credit report for 7 years from the date of last activity.
Fact or Fiction? – Paying off my credit cards in full at the end of every month will help my credit score. Fact. Payment History makes up 35% of your credit score. Pay on time and enjoy the benefits of great credit.
NOTE: To build scoring momentum you have to manage debt. In order to manage debt you have to carry debt. Paying cards on time and carrying a balance of 20-25% of your credit card limit is a good idea when NOT using your credit for a credit related transaction. Preparing your credit by paying off credit card debt before a credit related transaction is ideal when working to achieve maximum scoring potential and loan terms.
Fact or Fiction? – Closing credit cards will raise my score. Fiction. FICO score considers available credit and credit utilization. That is, what percentage of your credit you use. By closing credit card accounts, your utilization may go higher and thus, lower your score. You want to build your credit profile for short and long term strength and the credit scoring algorithms like to see seasoned, on time, active positive accounts.
Fact or Fiction? – The more money you make, the better your credit score. Fiction. Your primary income and other revenue streams do not figure into the credit scoring algorithms or your credit scores.
Fact or Fiction? – When you get married, you get a joint credit report. Fiction. We come into this world as individuals and enter the credit world the same way. You might get joint obligations such as a mortgage and credit cards, but your credit reports only involve you.
Fact or Fiction? – Credit Repair Companies can fix my credit. Fact. A compliant credit repair company with expert credit advisors can assist you in making improvements to your credit reports and scores. The Credit World platform which includes a fact based advisory platform and credit improvement formula eliminates confusion within the credit services marketplace and significantly reduces the cost of for hire credit advice.
Fact of Fiction? Credit Inquiries negatively impact my credit for more than 2 years. Fiction. Credit Inquiries (credit checks) are only on your credit for 24 months (2 years) and are only supposed to impact your scoring for the first 12 months (1year). Prepare your credit for transactions and keep your inquiries to a minimum.