Credit Score Myths

There are many people that will provide suggestions for ways to improve your credit score. This article will focus on some of the myths associated with credit scoring. It's believed that more credit or open accounts indicate greater credit worthiness. It's also believed that having only 1 or 2 major credit cards is best. Fact - Having 3 - 4 open revolving accounts will yield more points over time. The type of credit or credit issuer has little bearing on credit scoring.
Fact - Revolving major credit cards with low balance to high credit limits are preferred. It's true that all account that reports to your credit file must be positive and paid as agreed, however certain types of accounts, such as department store charge cards, mail order credit accounts and aggressive finance company accounts negatively impact your credit score (Individual Companies will not be identified). Some people believe that it's financially better and closing accounts will automatically increase your credit score. Fact - Closing accounts may actually be a detriment to your credit score. What's important is to close the proper accounts first. Your credit score is a numerical value based on several factors. The primary factor is your repayment of promised agreements. The longer that you have paid as agreed or have had arrangements to pay, lend to your credit payment longevity. Simply stated, in most cases you should close your newest / most recent accounts first. There are several additional qualifiers that may contradict the aforementioned. If you are purely raising the credit score the advise would be prudent, however it may make more financial sense to close the older account if it has a really high interest rate and due to credit improvement your most recent accounts have high credit limits with significantly lower interest rates. Finally, when shopping for a home or car multiple credit inquires won't affect your credit score. Fact - when applying for home or auto loans most people shop several offers before making a final decision. For this reason, your credit score will not be impacted due inquires that occur within a two week time frame. Fact - Your credit score will improve using tips such as these and those provided by www.score1st.com