Lets break down six myths about credit scores that need some serious light shed upon them. If you are buying a home and trying to secure a mortgage loan, these are some basics that you will need to understand about your credit score and make sure your score, and your subsequent loan is the best it can be! Myth 1. Your credit score drops if you check your own credit Truth: Viewing your credit score reports only as a "soft inquiry" and doesn't change your score. "Hard Inquiries" by a lender or creditor, though, can slightly lower your score. Myth 2: You should close old or inactive accounts to help your credit score Truth: Closing accounts may actually have the reverse effect of lowering your credit score because it can shorten the measured duration of your credit history. Myth 3: Paying off a negative record means it's taken off your credit report Truth: Generally, negative records like collections or late payments will remain on your credit report for up to seven years. | Myth 4: Cosigning doesn't mean you're responsible for the account Truth: If you open a join account or cosign a loan, you will be held legally responsible for the account, meaning activity on the joint account is displayed on credit reports of both account holders. Myth 5: Making on-time rental, utility, and cell phone payments helps my credit score Truth: While outstanding rental, utility, and cell phone debt that have gone to collections an negatively affect your score, generally, on time payments are not regularly reported to credit bureaus. Myth 6: Your credit score reflects changes or trends in your payment behavior Truth: Historically, credit scores have not incorporated trended credit information, meaning they are a moment-in-time glimpse at consumer risk. We hope this has helped clear up confusion on what actually impacts a credit score! If we can help you understand your credit information, or you would like to see what you can be approved for, give us a call at 619-Low-Rate |
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AuthorMortgage Professional in San Diego Archives
February 2016
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