When it comes to credit scores, some things just don’t matter – and others matter a whole lot more than you may expect. Although the exact calculation used to determine your credit score may never become public knowledge, patterns have emerged which provide clues to the mysterious calculation based upon the whims of big-wig financial gurus. Unfortunately, this calculation changes often – without notice, and without much clue as to what, why, or how it changed. As a result, there are a lot of credit score myths floating around, so make sure you base your actions on the most current information available.
Bad News For Your Credit Score
Some of the biggest negatives to a credit score are bankruptcies, foreclosures, and tax liens. Each can take 200 points or more from your score, so be very careful to avoid these situations at all costs. Bankruptcies are the easiest to recover from, as these only stay on your report for 10 years. Although foreclosures last just 7 years, your chances of getting a loan are much slimmer than if you declared bankruptcy. Worst of all is a tax lien – if you pay it late, a tax lien stays for 10 years, but if you don’t pay it stays for 15 long years. Otherwise, if you pay a tax lien on time, it just hangs around for 30 days.
Credit Score Myths
Sorry to say it, but paying that electric bill on time every time won’t do a thing for your credit score – but if you’re more than 30 days late, the electric company might report it to a credit bureau. The only thing bills can do to your credit score is harm it if you don’t pay on time, and the same is true for almost any payment history. Another common myth is every credit request inquiry hurts your score, and that isn’t true either. In all actuality, employer and personal credit request inquiries don’t harm your credit score at all – only when creditors and lenders put in the request does it take a few points off of your credit score. Although factors such as your current income and employment history do not directly affect your credit score, lenders and creditors often use this information in determining your credit-worthiness.
Good News For Your Credit Score
Also contrary to popular belief, having a balance on your credit card is actually a good thing. The trick is to keep your balance lower than 30% of your total available credit line every month. The closer to zero balance you maintain every month, the higher your score will climb, but a zero balance is just as bad as a balance over 30%. It also helps a great deal if you have the same credit cards and other credit-based accounts for a long period of time, since your “credit age” also affects your credit score. The “older” you are, the better your score. Basically, those big financial gurus are trying to make an accurate system to judge your credit-worthiness. So all these picky tricky rules are in an attempt to make something solid, static, and simple out of a human being’s actions – which are very obviously not solid, static, and simple. Just think for yourself what would make good business sense to a lender, and helping your credit score will become second nature.
Points of Contact:
Debt Free America
888-225-5332
AFS – Non-Profit Credit Counseling
(866) 851-4305
Rapid Services
(516) 216-1421
Reduce or Eliminate Your Credit Card Debt
(866) 764-8079
Coastal Credit Solutions, Inc. – Credit Management
(866) 415-9649
Free Debt Counseling – MMI and CCCS
(866) 264-6103
Mark A. Zirogiannis, PC
(516) 333-6200
Lexington Law Firm
(866) 906-1265
Solve Debts
(866) 905-9656
Credit Care
(866) 462-1636
Bruce C. Bridgman
(888) 890-7379
Genesis Financial Management
(866) 496-2651
DTS Financial Debt Settlement Company
(866) 432-1466
Successful Solutions Financial Services
(866) 404-8464
Express Debt Settlement
(888) 771-3328
Rausa D J Attorney At Law
(800) 422-3328
A Professional Credit Services
(800) 645-2190
FAQ: How do I check my Free Credit Report?
Your credit report is the basis for your financial standing. No matter how slick or smart you may be, no bank will touch anyone with a low credit score. It's their money, why would they want to take a bigger risk than they need to?
If you don't know where your credit report score is at, now's the time to take a peek. Don't get surprised with a low credit score when you go in to review your report with a potential lender or even an employer, find out for yourself within minutes.
