Nine Credit Score Myths

how long to wait after foreclosure

Tyler Frank,
Paramount Mortgage
NMLS ID 942420

We hear lots of advice these days about how to improve a credit score. However, not all advice is good advice. Here are nine credit score myths that could actually do more harm than good:

Myth #1 – Closing out old, inactive accounts will help your score.
Thirty percent of your credit score is based on your utilization rate – your total balances versus the total amount of credit available to you. Canceling old accounts reduces the total amount of your available credit, changing that ratio. Any balance will utilize a higher percentage of your credit, which will hurt your score.

Myth #2 – Opening (but not using) accounts will help your score.
To improve their utilization rate and, theoretically, their credit scores, some people open as many accounts as they can. According to Rod Griffin, director of public education for the credit bureau Experian, “Your score is affected by how well you manage the credit you do have over a period of time, not by how many credit cards you have or the available balances.”

(We work hard on this and sure would appreciate a “Like”)

Myth #3 – You should avoid using your credit cards at all.
If you’re a financially responsible consumer, this approach could negatively impact your credit score. Your score reflects the responsible use of credit. If you’re not using your credit, you’re not building credit history. Use your credit from time to time and then promptly pay off the balance.

Myth #4 – Dispute letters can clean up your bad credit.
Errors on your credit report can and should be disputed, but don’t expect to magically erase accurate but negative credit history. Dispute letters may force the removal of negative items temporarily, but once the lender can prove the record’s accuracy, it will reappear on your credit report.

Myth #5 – Paying off old debts and judgments will help your score.
Have a judgment or an account that went to collections? Don’t expect to make that negative “disappear” by paying it off. Negative records – judgments, collections accounts, bankruptcies or late payments – remain on your credit report for seven to 10 years, regardless of any remedies you’ve made.

Myth #6 – Credit inquiries hurt your score.
Inquiries alone have little impact on your score. Coupled with a history of bad credit, a hard inquiry, such as an inquiry for credit, could factor negatively into your score, but the effect would be minimal. Another myth: Pulling your own credit report, a soft inquiry, lowers your score. In fact, checking your credit report on a regular basis allows you to catch errors that could affect your score and identify those areas that need improvement.

Myth #7 – Using a credit counseling service lowers your score.
Credit counseling services no longer figure into the FICO scoring system, so although your report might indicate you are receiving credit counseling, using those services won’t lower your score.

Myth #8 – There’s a set formula for obtaining good credit.
Be suspicious of any blanket statement about what people should or shouldn’t be doing to improve their credit scores. “Credit is a very individual thing,” says Griffin. “Credit scoring looks at everything and takes it all into account. If you are keeping your balances low and paying your bills on time, you’ll have good credit and a good credit score.”

Myth #9 – You can get a perfect score.
Don’t go to Herculean efforts trying to obtain that elusive 850 – getting a perfect credit score is nearly impossible. Your credit score is a reflection of your credit risk, and regardless of your credit history, there’s always a risk. We recommend working toward a score of at least 740.

About the author: Tyler is Paramount Mortgage Company’s general counsel as well as a licensed mortgage loan originator. Tyler is a 1999 graduate of the University of North Carolina at Chapel Hill where he was a member of the university’s Dean’s List. He received his J.D. from Washington University’s School of Law in 2002 and is a member of the Missouri Bar Association and the Illinois State Bar Association.

Tyler is “big brother” mentor and role model to a young man through the Big Brothers Big Sisters of Eastern Missouri. He is a member of the St. Louis Sports Commission’s Associates Board, the University of North Carolina at Chapel Hill’s Alumni Admissions Committee and Mary Institute and St. Louis Country Day’s Alumni Executive Committee. In 2012, Tyler successfully summited Mt. Kilimanjaro (19,341 ft.) in Tanzania, Africa, and ran his first full marathon.

Tyler can be reached by email at tfrank@paramountmortgage.com or by phone at 314.372.4313.

Print Friendly, PDF & Email

22 comments to Nine Credit Score Myths

  • Hi there, i read your blog from time to time and i own a
    similar one and i was just curious if you get a lot of spam comments?

    If so how do you reduce it, any plugin or anything you
    can suggest? I get so much lately it’s driving me
    insane so any assistance is very much appreciated.

  • Magnificent goods from you, man. I’ve understand your
    stuff previous to and you are just extremely wonderful.
    I really like what you’ve acquired here, really like what you’re
    saying and the way in which you say it. You make it enjoyable and
    you still take care of to keep it wise. I can’t wait to read much more from you.
    This is really a wonderful web site.

  • As the admin of this website is working, no uncertainty very rapidly it will be famous, due to its quality contents.

  • Today, I went to the beach with my children. I found a sea shell and
    gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She placed the shell to her ear and screamed.
    There was a hermit crab inside and it pinched her ear. She never wants to
    go back! LoL I know this is totally off topic but I had
    to tell someone!

  • I’m gone to tell my little brother, that he should also go to
    see this web site on regular basis to take updated from newest reports.

  • I’m curious to find out what blog platform you’re utilizing?
    I’m having some minor security problems with my latest site and I would like to find something more safeguarded.
    Do you have any suggestions?

  • My partner and I stumbled over here different web address and thought I might check things out.
    I like what I see so now i’m following you. Look forward to looking into your web page repeatedly.

  • … [Trackback]

    […] Info on that Topic: stlouisrealestatenews.com/st-louis-interest-rates/nine-credit-score-myths/ […]

  • I know this site provides quality dependent content and additional data, is there any other site which
    provides these kinds of information in quality?

  • I know this if off topic but I’m looking into starting my
    own blog and was wondering what all is required
    to get set up? I’m assuming having a blog like
    yours would cost a pretty penny? I’m not very internet savvy
    so I’m not 100% sure. Any tips or advice would be greatly appreciated.

    Many thanks

  • Good day! I know this is kinda off topic but I was wondering which blog platform are you using for this site?
    I’m getting sick and tired of WordPress because I’ve had problems with hackers and I’m looking at
    alternatives for another platform. I would be fantastic if you could point me
    in the direction of a good platform.

  • Highly energetic post, I liked that a lot. Will there be
    a part 2?

  • I don’t even understand how I ended up right here,
    but I believed this put up was good. I don’t understand who
    you might be but certainly you’re going to a well-known blogger if you are not already.

    Cheers!

  • … [Trackback]

    […] Find More Info here to that Topic: stlouisrealestatenews.com/st-louis-interest-rates/nine-credit-score-myths/ […]

  • I know this if off topic but I’m looking into starting my own weblog
    and was curious what all is needed to get set up? I’m assuming
    having a blog like yours would cost a pretty penny?

    I’m not very web savvy so I’m not 100% certain. Any tips or advice would
    be greatly appreciated. Kudos

  • naturally like your web site but you have to check the spelling on several of your posts.
    A number of them are rife with spelling problems and I find it very troublesome
    to inform the truth then again I will definitely come back again.

  • It’s really a cool and helpful piece of info.
    I am glad that you just shared this helpful information with
    us. Please keep us up to date like this. Thank you for sharing.

  • Pretty nice post. I just stumbled upon your weblog and wished to say that I’ve really enjoyed browsing your
    blog posts. In any case I’ll be subscribing to
    your rss feed and I hope you write again very soon!

  • It’s perfect time to make a few plans for the future and it is
    time to be happy. I have learn this put up and if I may just I wish to recommend you some interesting issues or tips.
    Maybe you can write next articles regarding this article.

    I want to read more things about it!

  • … [Trackback]

    […] Find More on that Topic: stlouisrealestatenews.com/st-louis-interest-rates/nine-credit-score-myths/ […]

  • This design is spectacular! You most certainly know how to keep a reader
    entertained. Between your wit and your videos, I was almost moved to start my own blog (well, almost…HaHa!) Wonderful job.
    I really enjoyed what you had to say, and more than that, how you presented it.

    Too cool!

  • Hello, I enjoy reading all of your article. I like to write a
    little comment to support you.

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>