The credit industry can be a confusing world for consumers. It is even more frustrating because of the number of myths that exist about credit reports, credit ratings, and the credit industry itself. Many of these rumors can be easily put to rest with just a little research and review.
Myth #1 “Personal inquires into my own credit will hurt my credit score.”
Experts remind consumers that numerous inquires will cause a drop in a credit score. This has been translated to mean that a personal review of a credit history will be viewed like a commercial view. That is not true. Reviewing your own credit history will cause no adverse marks on your record and is the most reliable way to keep a close watch on your credit history.
Myth #2 “Credit reporting agencies are basically government entities out to help the consumer.”
There is no telling how this myth began but there is no truth to the story. Credit reporting agencies are for profit companies. That is why it costs money to get your credit report. The government did impose the Fair Credit Act which forces the major reporting agencies to issue one free credit report per year to consumers. But that is as close as the relationship between the government and the reporting agencies gets.
Myth #3 “Credit statements can be beneficial to the credit score.”
A credit statement is the consumer’s side of the story. These became a part of the credit history process in the 1970’s. At that time most credit histories were reviewed in their entirety by lenders. Today a credit statement will have little effect on the consumer’s ability to get credit. The credit score (FICO) does not reflect the credit statements and it is the only thing most lenders review these days. However, credit statements are still allowed and it never hurts to have more on your side (and they cost nothing to be included in your credit history).
Myth #4 “The law requires that negative marks remain on the credit history for seven years.”
It is easy to see how this has become misinterpreted. When the government issued the ruling that negative marks must be removed in seven years that number was all that most people heard. The truth is that a negative mark can be removed at any time. The law only requires that it MUST be removed before seven years has passed.
Myth #5 “Closing all old accounts will help increase the credit score.”
It seems logical, but closing accounts can actually hurt your credit score. There is value given to the age of your credit account and the older it is then the better it will reflect in your credit score. If you are going to close accounts then you might want to consider closing the ones you opened most recently instead of those that have been around for a long time.
Myth # 6 “Trying to repair a credit history is unlawful.”
There are many methods that have been utilized to “repair” a credit history that are illegal. That does not make the repair process wrong. Some credit companies will reply in correspondence that getting assistance with a credit history is not right. That does not mean the credit companies are right. It is always within the consumers rights to seek professional assistance with a situation. And there are plenty of steps that consumers can take (on their own or with assistance) that are not only legal but actually beneficial to the industry and to the consumer.
The credit industry is ripe with rumors and stories that make many consumers scared to try and fix a problem with their credit histories. Your credit history is there for your benefit. As long as the steps you take are legal and moral then you are within your rights to step out and fix what is broken in your financial life.
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