10 Credit-Report Myths, Busted!
BY: Tamar SnyderWith today’s tightened lending requirements, credit is harder to come by. So 750 is the new 720 — when it comes to an above-average credit score, that is. Whether you’re thinking of refinancing your mortgage, purchasing a new home, or taking out a car loan, it’s more important than ever to understand the factors that affect your credit report. After all, a higher credit score could very well translate into a better interest rate that saves you thousands of dollars. When it comes to your credit report, believing the myths can definitely hurt you.
MYTH: I can boost my credit score by closing credit cards I don’t use.
FACT: Think twice before closing an account — especially if it’s a credit card you’ve had for several years.
That’s because both the length of time that an account is open and the balance in relation to the card’s maximum limit factor into a credit rating, according to Rodney Anderson, a mortgage and credit expert and the managing partner of Rodney Anderson Lending Services located in Plano, Texas. A better bet may be to store the credit card in a drawer. Just be sure to keep the account active by using the card to make a purchase at least once a quarter, he advises.
MYTH: Checking my credit report will lower my score.
FACT: A “hard credit pull” — say when you’re applying for a new credit card or a mortgage — will stay on your credit report for at least six months, and will lower your score, says Avinash Karnani, co-founder of justthrive.com, a free online personal finance management tool. But when you check your own credit report, it does not impact your credit score. In fact, checking your credit report and score is a “great tool, especially when you’re making big-ticket purchases,” says Charles Harris, an executive at FreeCredtReport.com. “The higher your score, the more likely you may be able to negotiate lower interest rates, which gives you more control over your personal finances.”
MYTH: My age, race, gender, marital status, income, or where I live can impact my credit score.
FACT: Not true, says Lynnette Khalfani-Cox, author of Zero Debt: The Ultimate Guide to Financial...
