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“Myth-Conceptions” of Credit

by Carla Griffin on October 13, 2011

MYTH #17: Going over the balances on your credit limits are ok because the credit company authorized the purchase. That’s not true ia any way because what will ultimately show on your report is the amount of credit that you used  versus your credit limit.

MYTH # 18: “As long as you pay off your credit card balances, your score will go up.” The reality is that if your card is maxed out, the way  you are paying on it will just affect your payment history and most likely it will remain the same. As you pay credit cards down, then the score will get better.

MYTH # 19: Types of credit don’t matter. The credit scoring system gives weight to different types of credit providers better than others. They give more points to American Express, Visa, MasterCard by predominant national banks than they do to department stores, furniture stores, or gas cards. Subprime and “secured” Visa and Master Cards do not score as well either.

MYTH # 20: Paying off an old collection or charge off will increase your credit score. This is a huge myth, because what will happen is as soon as you pay off an old collection or charge off, the new date of last activity becomes reaged, because you have just changed the date of last activity and they get to report the derogatory information for another 7 years! If you are  concerned about your credit score, then paying off debts prior to obtaining any type of loan or mortgage will certainly hurt you greatly because it will be re-aged, and it will affect it as if it just happened yesterday. The recent activity  of any derogative item has great affect on how it affects your overall credit score.

MYTH # 21: Using debit cards will help you build credit. This is completely false. Debit cards are just like your bank account, they do not get reported to the credit reporting agencies an any way.

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