Some Credit Repair Myths Debunked

Economy has changed and credit scores are extremely valuable. Credit repair has become their priority. Many advices are given to people to improve their credit score but most of them turn out to be myths. Some myths can spoil your attempt to maintain and attain good credit.

Some strategies illustrated by many companies and people are absolutely wrong and people end up neglecting the most important aspects. Closing old and inactive accounts, avoiding the use of credit cards, dispute letters removes negative items, paying of debts, opening new accounts (but not using them) and many others are not stressed upon.

Some of the myths still believed in today’s world:

1. INCOME: Though income influences the access to one’s credit and helps to pay of the money, it is not used in calculating one’s bad credit score. Hence, it does not have any impact on the credit score at all.

2. UTILITY BILLS: Late and default payments, in regard to credit cards affect the credit score critically, late payment of utility bills does not affect the credit score. It affects the score only if you are a defaulter and make late payments quite frequently.

3. RENT: Rent is treated as a utility bill, so this also does not affect the credit score. You can easily fix bad credit. If late payments are reported frequently, it is taken into account.

4. BANK OVERDRAFT: Bank overdrafts are of similar types. Only if bank overdrafts are reported frequently it affects the credit score.

5. AGE: The age of a person does not have any impact on the credit score. Only the age of credit history is taken into account.

6. CREDIT INQUIRIES: Inquiries can affect the credit score negatively, though they have very less impact. Only when there is an inquiry if there are a couple of bad credits, it affects the credit score. One can also check their credit score without putting an impact on it.

7. INTEREST RATES: Bad credit scores are not affected by interest rates. Credit scores do not decrease if the lender gives you loan at a higher rate or the other way round.

8. CREDIT COUNSELING: It is also believed that credit counseling lowers the credit score. FICO no longer takes into account credit counseling. In the credit report, credit counseling might be indicated but it does not have any impact. It does show a negative effect if the counseling agency pays the accounts.