Credit Myth 1: “Going over the balances on your credit limits is okay, because after all, the credit card company authorized the purchase.”
This myth seems like it has its origin story as a rationalization from a compulsive spender, doesn’t it? Regardless, it’s not true in any way, shape or form. What will ultimately show on your report is the amount of credit that you used versus your credit limit.
Credit Myth 2: “As long as you pay off your credit card balances, your score will go up.”
The reality is that if your credit card is maxed out, you’re paying on it will just affect your payment history and mostly like it will remain the same. As you pay credit cards down, then your score will get better, as your utilization rate goes down. But just paying on time, in and of itself, will not make your score go up.
Credit Myth 3: “Types of Credit don’t matter, it’s all the same.”
Actually, the credit scoring system gives more weight to some types of credit providers better than it does to others. They give better weight to an American Express than they do to a sub-prime Visa or MasterCard. They give more weight to Visas and MasterCards by predominant national banks that they do to furniture store cards, or gas cards, or department store cards. They feel that consumer are desperate if they can’t attain a major credit card, therefore, they give more weight to the major credit cards.
Credit Myth 4: “Paying off an old collection or charge off will increase your credit score.”
This is a huge myth, and it’s contagious because it makes sense. Really, though, what will happen is that as soon as you pay off an old collection or charge off, the “date of last activity” becomes more recent, and therefore they get to report that item for another seven years! As accounts get older, they affect your credit score less and less. Now, I’m definitely not saying that you shouldn’t pay off old debts, but it’s an important detail and something to be concerned about.
If you’re most concerned about your credit score, then paying off debts prior to obtaining any other type of loan or mortgage will certainly hurt you greatly because they will be re-aged, and it will affect it as if it just happened yesterday. The recency of any derogative item has a great affect on how it affects your overall credit score.
Credit Myth 5: “Using debit cards will help to build your credit.”
Nope. This, too, is completely false. Debit cards are just like your bank account, they do not get reported to the credit reporting agencies in any way.
At La Familia Multiservices, we will work with you to repair your bad credit and will help you raise your credit score. We really want to help people repair their credit and we do so in a very professional way that is really personable. We will assess your credit and let you know where you currently are and where you should be. Our credit repair specialists will help you set goals and then do what we can to help motivate you to achieve those goals.
For details regarding credit repair please call us at 305-762-1818