Everyone is aware of the fact that a good score helps in taking out loans at favorable terms and conditions. However, many of you have certain misconceptions regarding what is good for your credit history or score and what doesn’t. It is advisable that you clear your misconceptions so that you can follow the right steps to raise your score. This article deals with some common myths and realities of protecting credit history and raising your score.
- Myth: Paying off debts improve your credit history immediately.
Reality: Your credit report is actually the history of your payments over a certain period of time and not just the snapshot of your present account status. So, paying off your debts doesn’t improve your overall credit history instantly. This is because certain negative items (such as, delinquencies and late payments) take some time to get deleted from your reports.
- Myth: Negative items continue affecting your credit history forever.
Reality: It is true that certain negative items stay on your credit reports for sometime. But, it doesn’t mean that they would continue affecting your credit history forever. For example, a bankruptcy remains on your credit reports for 7-10 years depending upon which Chapter you’ve filed. Moreover, the negative effects decrease with time as you start building a positive credit history. You should also follow the right procedure to dispute inaccurate negative items in your credit reports. By doing so, you can delete the inaccurate items from your reports that in turn, may help raise your score.
- Myth: Checking your scores affect your credit report negatively.
Reality: Checking your FICO scores or monitoring your credit reports at regular intervals doesn’t affect your credit reports or scores negatively. On the contrary, you should check your credit reports at regular intervals so that you can dispute errors if any. In turn, it would help you in protecting credit history. Your credit report may get affected when the credit card companies make multiple inquiries so as to decide whether or not to offer you a pre-approved credit card. However, credit bureaus usually treat multiple inquiries in a 45-day period as only 1 inquiry.
- Myth: Your credit histories get merged when you get married.
Reality: You should know that your credit history is only yours. It doesn’t get merged with that of your wife’s or husband’s when you get married. However, when you open joint accounts, the specific information gets reflected on both of your credit reports as both of you’re responsible for managing the account.
Apart from above, many of you think that checking only 1 credit report and disputing errors in them (if any) can help in protecting credit history. However, not all creditors report to all the 3 major bureaus namely, Experian, Equifax and Trans Union. So, you should check all 3 major credit reports at regular intervals that would also help you in having a clear understating of your credit profile.
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