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Credit Myths

Tuscani
Moderator Emeritus

Credit Myths

Below are some of my favorite credit myths. Feel free to post your own!
 
--
 
1. Paying off a collection account or settling a debt will improve your credit score. Or, paying a collection makes it a positive account.
 
2. Closing old, unused accounts will improve your credit score.
 
3. You should never have more than 2 or 3 credit cards.
 
4. The only way to fix your credit is wait 7 years for all the negative information to age off.
 
5. Credit reports are always accurate.
 
6. Bankruptcy is the end of the world and you will never be able to buy a house or a car.
 
7. I shouldn't look at my own credit reports, that will lower my score.
 
8. Having a mortgage will improve your FICO by 100 - 150 points if you're below 600.
 
9. You need a co-signer to buy a car with $0 down.
 
10. Never PIF on a credit card, because your credit report will show that you never use the card.
 
11. If you keep a good relationship with a bank (checking / savings acct.), they're much more likely to overlook your credit report.
 
12. If an inquiry shows on your CR, as long as your were approved and the account is showing, the inquiry doesn't hurt your score.
 
13. Everyone pays 18% on car loans and 25% on credit cards.
 
14. If you don't need a large CL, you should request a lower CL.
 
15. If you contact a creditor that would change the date of last activity; thus start the 7 year reporting period all over again.
 
16. Maxing out credit cards doesn't hurt your credit.
 
17. Collectors can harass you for a 7+ year old debt.
 
18. Adding a personal statement to a CR explaining a judgment or collection is a good thing.
 
19. CC companies never lower your limit or close your account as long as
pay the minimum and on time.
 
20. The CRA's share the same information
 
21. An occassional 30 day late isn't a big deal
 
22. Disputing an account, making a payment on an account, the transfer to a collection agency always starts the 7 year clock over.
 
23. If I succeed in deleting a negative item, it will just come right back on my credit report.
 
24. If I declare bankruptcy, I can begin my credit report all over with a clean slate.
 
25. Medical bills don't count.
 
26. Pre-Approved equals guaranteed approval.
 
27. I have no recourse after being denied credit.
 
28. Student loans don't help your credit at all.
 
29. Having NO credit is better than BAD credit
 
Message 1 of 16
15 REPLIES 15
HouseHunter
Frequent Contributor

Re: Credit Myths

The one that has me in the shape I'm in now is #4.  Knowing what I know now, I could kick myself for doing nothing for the last 7 years.
Message 2 of 16
Noah_Bodie
Senior Contributor

Re: Credit Myths

Great stuff!

 

"17. Collectors can harass you for a 7+ year old debt."

 

Picking at nits. CAs can NEVER harass you, whether the debt went delinquent last week or in 1982. Section 806 of the FDCPA.

 

They can legally call or write, at least until you C&D 'em, even if the debt is from 1982.

Message 3 of 16
TheNewWorldMan
Valued Contributor

Re: Credit Myths

And with regards to #4, sometimes there is nothing you can do to improve your credit...if your FICO is 488 with recent baddies, no one is even going to give you the chance to try and establish good credit history. 


Message Edited by TheNewWorldMan on 04-29-2007 02:19 PM
- - - -
in a credit-scoring postnuclear Stone Age...
Message 4 of 16
HouseHunter
Frequent Contributor

Re: Credit Myths


NWM wrote:

And with regards to #4, sometimes there is nothing you can do to improve your credit...if your FICO is 488 with recent baddies, no one is even going to give you the chance to try and establish good credit history. 

In my case, had I gotten a secured card 2-3 years after I got in trouble and been responsible with it then I would have history now and my scores would be where I need them to be to purchase a home.  I didn't because I thought I was finished for 7 years based on what people told me.  I truly had no clue about anything regarding credit.  I'll be the first one to admit it.  Now I have limited history and am paying for not wising up soon enough.  I'm in my late 30's and I can't get that time back!  Smiley Sad

Message 5 of 16
smallfry
Senior Contributor

Re: Credit Myths

Late 30's? You're still young you have plenty of time left.
Message 6 of 16
masdeocho
Moderator Emeritus

Re: Credit Myths

30.  If I do X, my score will increase/decrease by a set number of points.
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
Message 7 of 16
Boswd
Valued Contributor

Re: Credit Myths

17.   though they may not 'HARASS' you on any bad debt,  CA can continue to try to collect on debts that are over 7 years.   No SOL on trying to collect a debt only a SOL on legally being able to collect on a debt.
Message 8 of 16
Tuscani
Moderator Emeritus

Re: Credit Myths

Good point. They can try all day. Smiley Happy
Message 9 of 16
Noah_Bodie
Senior Contributor

Re: Credit Myths

Calling all day would likely constitute harassment.
 
A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
...
(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.
Message 10 of 16
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