#1: You Can Remove Less Favorable Accounts to Boost Your Credit Score

This is based on the idea that the credit score formula takes into account all a consumer’s accounts and their payment history for the last seven years. The myth states if the account is closed it doesn’t exist any more and therefore will not be on your credit report. This is far from the truth. If you do close an account it just doesn’t disappear it stays on your credit report for a long time along with it’s payment history. This means if you paid this closed account late last month, this late payment will be on your credit report for the next 7 years and will be included in your credit score.

#2: If You Get More Credit You Will Improve Your Credit Score

Actually, Fair Isaac, the creators of the FICO score, state that it will not improve your credit score. There are several other pieces to your credit score that will be affected by getting new credit. First is the average account age. Having a new account will drop your average account age which is another major part of your score. Second is the act of applying for new credit will be seen as a hard inquiry which the credit score formula also counts. So depending on your credit situation this might even hurt your score so be wary before doing so. If you don’t need credit don’t apply for it. More than likely there is a reason why a consumer is carrying a large amount of debt and having more available only increases their risk to have more. It would be better to figure out a method to pay down the existing debt to improve your debt to credit ratio.

#3 Shopping for Credit Will Hurt Your Score

The myth is based of the idea that every time a consumer applies for credit it will count as a hard inquiry and go against their score. This credit myth is both true and false. It really depends on the type of credit the consumer is shopping for. An example of this is consumers are allowed to shop of loans that are large purchase such as a mortgage or auto loan. These are large purchases that consumers need the availability to shop so they get the best deals. Credit Cards are different. Consumers should not shop for credit cards. The terms and conditions are stated up front and there is no negotiation. Therefore, every time a consumer applies for a credit card it will be considered a hard inquiry and this should be avoided.

#4 If You Are Well-Off You Have a Good Credit Score

It is commonly believed if you have a lot of money you have a good credit score. Well, this actually might not be the case. Many individuals that seem to have money have a lot of debt. The persona of having expensive cars can houses is held up by huge amounts of debt that will eventually kill a credit score. Many of individuals like this live beyond their means. It always baffles people when they hear a celebrity or a sport figure go bankrupt but it will happen if there is terrible management of cash flow and debt.

#5 Adding 100 Word Statements to Your Credit Report Will Help

A 100 word statement is side of the story when it comes to an item on your credit report. While it will provide your side of the story when it comes to that late payment of your phone bill, it will not be included in the credit score calculation. There is no way for it to be considered. So if you are thinking about adding a 100 word statement just keep that in mind.

#6 Use Another Person’s Accounts to Improve Your Credit Score

The practice is to do what as known as piggybacking. This is when you find a person willing to add a consumer to their account so they get the benefit of their great payment history. There are many firms out there that are even selling this solution to improve your score, but new changes to the credit score formula could put an end to this practice. The new FICO score formula fives no boost in scores for this practice and it is seen as deceptive.

7# Your Credit Score is Free

This one is one of the largest myths you will here. There are site dedicated to offering a so called “free credit score”. It should be known by law consumers are entitled to one free credit report once per year from each credit bureau. This law does not state a free credit report. The ads you hear for a free credit score comes with strings. It usually includes, the consumer signing up for a credit monitoring program. It is free for the first month and then a monthly charge there after. These are not a bad thing and there are many benefits to a credit monitoring program but that really wasn’t what the consumer was shopping for. The free credit score is the lure. So if you sign up for one of these deals you must cancel within the stated grace period of you will be charged.  There is no better example of this than the post on Free Credit Report.com Versus Annual Credit Report.com

#8 Close Old Unused Accounts

This credit score myth is based on the fact by having a lot of available credit you represent a higher risk to lenders and will have a lower credit score or something like that. What might happen if you do close these account you will kill your account history. Mainly this could be two different things: maybe closing the oldest account you have and dropping your average account age. These are two detrimental actions to your credit score and need to be avoided. It should be said that closing an account is not always a negative thing for instance if you are a consumer who is having trouble controlling spending. Not having this available line of credit might save you from yourself, but this might also be achieved by just shredding the credit score. It is your choice.

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1. Get all of your credit cards together and list the details of them. State the balance, interest rate, minimum payment percentage and other details that are relevant.
2. On the list of your credit cards rearrange it so that the card with the highest interest rate is at the top and descends accordingly from highest to lowest.
3. Calculate the required minimum payments for all of the cards.
4. Work out how much extra money you can come up with each month to apply to your credit card debt. If there are no ways you can pay additional amounts above the minimum payment then you should work out a budget and cut any expenses.
5. Every month you should pay the minimum amount on each credit card except for the one with the highest interest rate. The one with the highest interest rate you should pay the minimum balance plus the additional amount that you can afford. This will allow you to reduce what you owe each month.
6. You should do this until the card with the highest interest rate has been paid off entirely. Now take the amount you were paying off on that credit card each month and then use it with the minimum payment on the second card until this has also been paid off, continuing to pay the minimum amounts on your others cards as well.
7. Keep repeating the process until all of your credit cards have been paid off.

There are some experts that recommend paying off the cards with the lowest interest rates first because they are easier to manage. In my opinion this is a mistake because the higher interest rate cards accumulate even more costs more quickly. This is why priority should always be given to the highest down to the lowest. By the way, do not be afraid to call your credit card companies and ask for a lower interest rate. You may be surprised at their reactions. If the company refuses to lower the interest rate then do some homework and find a new card with a lower rate of interest and transfer the balance. Lower interest rates mean that the debt is far more manageable for you and will be less stressful. If you would like more information on strategies about debt reduction then please consult an expert in your country of residence.

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Another aspect to consider is that your credit report is a snap shot of your credit standing.  It is not changing hour to hour.  There is very little change month to month.  If you consider a common credit score quick fix of paying off an account, you will not immediately see the effects.  This is because it needs to be reported by your account to the credit bureaus.  Your accounts are in no rush to report to the credit bureaus leaving you waiting for the effects.

If you are looking for a credit score quick fix one of the best is to dispute credit report errors.  The level of errors is high.  Bankrate.com reports that 70% of credit reports have errors on them.  You should know that these are usually not in the favor of the consumer and getting these errors removed will give you the boost you are looking for.

But is it really a credit score quick fix?  Even this is going to take sometime.  The error dispute process starts with you getting a copy of each of your credit reports or a 3 in 1 credit report.  Then you have to go through each section thoroughly.  Then you must research the potential errors and get your side of the story correct.  Then you must submit disputes for each item with the corresponding credit bureau.  Then the credit bureau has 30 days to respond back to you with the answer to whether it will be removed or not.  If you are in luck it will be removed and this will give you a credit score boost.  But if is not removed that leaves you wilh having to pursue the account with the dispute.  Then you are at the mercy of your account equaling more time.

The best rest you could get from disputing errors is a 30 day turn around time.  Relativity speaking this is one of the quickest.  There is another method you could also use.  It is to make sure your positive accounts are reported.

Accounts sometimes fail to report information to the credit bureaus.  You might have one of these accounts and it might be one that you want to make sure is reporting.  You can call and ask your account to report your account history so this is taken into your credit score.  There is no guarantee that they will report, but it doesn’t hurt to ask.

The credit score quick fix really doesn’t exist though.  These are just some method to get you a quick boost.  A credit score methodology is use your history to calculate your score.  Certian aspects of your credit score like your payment history takes into account your last seven years of payments to your creditors.  It is the largest section (35%)  and is not much you can do to change what it says about you.

Above were just some ideas to get you a little boost.  To get an excellent credit score you will need to build it over time.

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1. Start Paying Your Bills on Time

The largest core area of your credit score is your payment history.  And not paying on time is going to kill it.  This is the number one best way to raise your credit score.  It does sound simple but individuals struggle with this piece every month.  It often has to do with the lack of a budget or lack of experience managing money.

2. Pay Down Your Debt

If you owe a lot, you need to develop a plan to pay down your debt.  This is the second biggest way to raise your credit score.  Your utilization is 30% of your credit score and being close to your limits will hurt it.  It also comes back to having a budget and developing a plan to use extra money to pay down debt.

3. Avoid Balance Transfers

Many individual use and advocate balance transfers as a way to get out of debt.  The truth is they often don’t work.  It has the effect of just moving the debt around.  Also, since your credit utilization is calculated on an account by account basis, you will can this to rise.  This will put you closer to your limits with that card and hurt your credit score.

4. Don’t Apply For Credit If You Don’t Need It

Don’t think you should apply for every credit card offer that comes to you.  Also, if a store offers you a 10% discount to apply for a store credit card, it isn’t worth it.  Each time you do this it creates a credit inquiries.  These have the ability to hurt or not hurt your credit score.  The idea is if you are applying for new credit all the time you represent a risk and will hurt your credit score.  You should only apply for credit as you need it.

5. Dispute Credit Report Errors

If you are looking of how to raise your credit score, you should start with disputing errors on your credit report.  You don’t think there are any errors.  Well, chances are you are wrong.  Studies have shown that 70% of credit reports have mistakes on them.  The only who is going to catch these most of time is you.  So check for and dispute errors.  This will help to raise your credit score.

6. Check Your Credit Report More Than Once Per Year

Now that you understand that errors are reported about you, you need to be looking for them.  You should look at your credit report a minimum of once per year, but if you really want to stay on top of it, twice would be better.  This prevents recently reported errors from staying on there if you dispute them.

There are even more than these and I will continue add more.  I hope that these are helpful

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Consumers sometimes believe that if the debt is unpaid and it is older than seven years it will be off your credit report.  The truth is these debt will go to collections and will not be removed.  So the late payments will not show, but the collections will stay.

Considerations When Paying Old Debts

It could or couldn’t hurt your credit score.  This is because of the different scoring models used.  Paying these old debt will make the certain formulas think this debt is new.  Other formulas specifically the newer FICO formulas realized that you are paying old debts and it will not effect your credit score.

The Statue of Limitations

Every state has a different length of time to which a creditor can sue you over a debt.  If you do pay these old debts this can extend the exposure.  It is also an admission that you do owe this money and the account could take you to court over it.

Who You Pay

Often the company that you now owe the money to will not be the original creditor.  This is because debts are often sold for collection agencies and this means you will have to deal with them.

What You Owe

Since individuals are more than likely dealing with a collection agency, they sometimes do not feel the same way about paying them compared to the original account.  For individuals who look to pay off these debts, they often can negotiate with the creditors to what they will pay.  Though some people state it is a moral obligation to pay what you owe.

Other Considerations

Collection Agencies

The companies in this field can be difficult to deal with.  That actually might be an understatement.  Consumers frequently have complaints about dealing with them.  Some best practices is:

• You should try to deal with the original creditor if possible
• If you are dealing with a collection agency you need to plan your attack.  You should try to exchange a lump sum payment for the account being deleted.
• Get everything in writing.  This is a must if you are going to protect yourself.

Try to have the account reported as “paid as agreed”

Paying the old account could have the account state it was settled on your credit report.  This will carry a large negative effect on your credit score.  You should try to negotiate it to read “paid as agreed.”  Even better would be to work the agreement with the account to have it stop being reported.

Conclusion

Be careful if you are deciding to pay old debts.  The last thing you want is to land in court.  Sometime consulting a lawyer is a good idea.

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