Common Credit Score Myths

A lot of credit score myths about fico score ratings get spread around and some of them are just outdated information. Sometimes even lenders can give you the wrong advice and it can get confusing. But the bottom line is bad information can cost you money no matter who you get it from.
Fico score ratings are used for most mortgage lending, which means, you need to know what will hurt or help your credit score points. To make it clear, here are some of the most common credit score myths.
* Checking your credit report will hurt your credit score
Checking your own credit report and credit score counts as a soft inquiry and does not go against your score. However, if anyone else like a lender or credit card company is checking your credit report, this is considered a hard inquiry and will generally knock off about 5 credit score points.
The credit score rating system treats multiple inquiries in a 14-day period as just one inquiry. The system ignores all inquiries made within 30 days prior to the day the credit score is computed. So if you want to minimize the damage from credit inquiries, shop for a loan in that short period of time.
* Closing old accounts will improve your credit report score
Sometimes even lenders will tell you to close your old and inactive accounts as a way for improving your credit report score. In most cases, closing old accounts will actually have the opposite effect with the current credit score rating system.
Canceling old credit accounts can actually lower your credit score because it makes your credit history appear shorter. If you want to reduce your levels of available credit, it's better to reduce or close new accounts instead. Applying for new credit is more likely to lower your score.
* You need to check more than just FICO score rating
If you ever hear this from anyone, consider it a red flag. All of the three major credit reporting bureaus offer FICO credit score ratings using the formula developed by Fair, Isaac. Even though each one gives the scores a different name you only need a fico score rating from the three major credit reporting bureaus.
At Equifax, the FICO score rating is called the Beacon credit score. At TransUnion, it’s called Empirica. At Experian, it's known as the Experian/Fair, Isaac Risk Model.
The reason each of the three major credit reporting bureaus will have three different scores is because they don’t all share the same data. So when checking your credit report, just make sure it comes from the three major credit reporting bureaus: Experian, Trans Union and Equifax.
Examine your credit reports from all three major credit reporting bureaus before you apply for a big loan like a mortgage. Fix any errors in all three reports before you shop for a loan because it takes time to correct your credit report.
* Credit counseling will hurt your score
The current FICO credit score rating system ignores any reference to credit counseling that may be in your file. The researchers at Fair, Isaac, the company that created the FICO credit scoring rating system, found that people getting credit counseling didn’t default on their debts any more often than anyone else.
However, any late payments you've had with creditors will hurt your credit score. Credit counseling can hurt your ability to get a loan because you probably have had trouble paying creditors.
Some lenders will back away if you are in credit counseling. Others may see it differently, but usually will charge you higher interest rates than if you had perfect credit.
The best way to improve your credit report score is paying your bills on time and paying down credit card debt. Check your credit report regularly for any errors and make sure you don't fall for these common credit score myths.
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Credit Reports... What You Need To Look For

You need to look over your credit report VERY carefully, and make sure you understand everything that is being said about you on your credit report. For more info on debt and how to get out of it visit my website...www.debt-professor.com .
Check to make sure your credit report doesn’t contain any of these:
- Errors and/or inaccuracies- Misleading information- Incomplete information- Outdated or derogatory accounts
A Billing Error Can Be:
- A charge for something you didn’t buy or authorize.- A charge with the wrong date or amount for a good or service that you didn’t accept, authorize or receive.- A math mistake- A failure to credit a payment or return- A failure of an issuer to send a bill you your current address once you’ve given notice of your situation.- Any charge you want explained or you don’t recognize can be treated as a billing error. Read that last line again…ANY CHARGE YOU WANT EXPLAINED OR YOU DON’T RECOGNIZE CAN BE TREATED AS A BILLING ERROR.
NOTE: Derogatory information is not allowed to stay on your report forever!!
Most negative items are not allowed to legally be reported longer than seven years. Things that have to come off after seven years are late payments, liens, judgments, charge-offs, repossessions, etc.
Bankruptcy can be reported for ten years.
While the above is true in most cases, companies can pull your entire credit history if you have:
1. Applied for a high-paying job 2. Applied for life insurance in excess of $50,0003. Applied for credit in excess of $50,000
Remember, in the above cases, your entire credit history can be reviewed, which may lead to approval you otherwise would not have had.
DISPUTING ITEMS ON YOUR CREDIT REPORT
You are allowed to dispute anything on your credit report, but first you will want to start with any information you find that is too old, inaccurate, or misleading.
Go through your credit report and circle or highlight any information you have questions about or want to try and remove.
Once you have identified the items you want to dispute, you will need to write a dispute letter for each item.
Credit Bureaus do not have to validate a disputed item that they deem to be frivolous.
To avoid being categorized as a frivolous dispute I recommend you dispute every item with a separate letter, and some say it is better if you handwrite your letters.
If you simply send in a letter with every account you want to dispute included on one page, they are much more likely to classify your dispute as frivolous.
There are several sample letters at the end of this book that you can use as a template for your disputes. You will want to vary the reason for your disputes depending on what item you are disputing.
IMPORTANT NOTE!!!
YOU MUST CAREFULLY DOCUMENT EVERYTHING YOU ARE DOING!!
Make copies of ALL of your dispute letters, and keep a copy for yourself. Be sure to sign and date everything! The better you document your case, the higher the likelihood of removal.
If you have documentation to support your claims enclose it with the letter you send, be sure to keep the originals for your own records and send the copies to your creditors.
When writing a dispute letter, be sure to state what item you want removed from your report in a simple direct way without providing too much detail. Use words like adverse, destructive, disadvantageous, disturbing, harmful, hurtful, injurious, negative, and unfavorable to stress how the item could potentially jeopardize your future creditworthiness.
YOU MUST SEND YOUR LETTER TO THE DISPUTE DEPARTMENT OF THE CREDIT BUREAU OR YOU WILL NOT SUCCEED!!
Send the letter by certified mail as well as standard first class with proof of mailing. The reason for sending your letters like this is because your creditor could deny receipt of your certified mail, and if you show you also sent with standard first class mail(with proof of mailing), you can prove you made a sincere attempt to contact the creditor by all means possible. Be sure to make copies of the ENVELOPES as well as the letter you are sending!!
ALWAYS INCLUDE PROOF OF YOUR IDENTITY WITH EVERY LETTER YOU SEND!!
In every letter include a copy of your Social Security Card or Drivers License AND proof of address ie. a utility bill or phone bill with your address and name on it.
I am an expert in debt settlement and credit repair. I offer the information above for those who do not know want to do their own credit repair, and are looking for a starting point to begin their search for credit repair companies. You can visit my website for information about settlement, credit repair, consumer credit counseling, etc.... I have also written an ebook on how to do your own credit repair. www.debt-professor.com