Contrary To Popular Belief, These Things Will Not Help Your Credit Score

There are no shortcuts to fixing your credit report – you will have to develop a clear understanding of the strategies that affect your credit rating to fix all the errors you have made in the past. When you are formulating your credit repair plans, don’t become a victim of the commonplace myths. Just invest your time gathering information as to what financial moves will help you genuinely fix your credit score. Remember, the key to a good credit rating is a good payment history, time spent wisely, and a healthy combination of credit types. In the following sections, we have exposed the reality of a few myths for you so that you don’t fall in their trap.

1. Opening new credit card accounts will increase credit score

Customers believing in this myth open several new accounts, thinking that this would serve as a proof that a customer is able to handle credit well. This is just not true and in fact renders the opposite effect. A potential lender will interpret so many credit accounts to be a weakness on your part, and will see you as a high-risk borrower. The number of “hard” inquiries on your credit report will instead do more harm to your credit score.

2. Closing old accounts will raise my score

Don’t make the mistake of believing in this myth. Closing off old accounts will most possibly put a dent in your credit report but not help your score in any way. This can in fact shorten your own credit history, leaving you with even less credit to avail. Essentially, the length of your credit history shows if you are a seasoned borrower or not and how well you have managed your credit over a long period of time. Having more credit to your name helps to push down the utilization rate, which shows how much credit a borrower typically uses from what is available, hence the lower the utilization rate, the better it will be for your credit score.

3. Paying earlier than the due date will boost credit score

Paying the credit card balance ahead of the due date will not improve your credit worthiness at all. However, if you pay off the balance before the closing date of the ‘statement’, your credit report will show a zero balance for your account; this would help lower your utilization rate, but not your credit score.

4. Paying Off Those Delinquencies Will Restore the Credit Report

Yes, this definitely will be helpful, but not to such an extent that you are expecting. Your paid off delinquencies will show a zero balance but still reflect the negativities associated with it, i.e. charge–off, late payment, or collection account. What you can do is that you request your creditor to erase the delinquency from your credit report in exchange for paying off the amount.

5. All Delinquencies Are the Same

At the end of the month, if you have only a limited amount of money from which you can pay off only a few chosen debts, then choose those debts very carefully. Late payment by 30 or 60 days on an auto loan or mortgage is bound to hurt your credit score quite badly, even more so than if it were a late payment on a credit card. Late payments are all bad, but if you are in a precarious situation, you must make a wise bet and play your cards well.

Focal point

Don’t fool yourself into thinking that a shortcut approach will help you improve your credit report, because it won’t. Try to be consistent with a decent payment history:

  • Keep your utilization rate low
  • Diversify your accounts
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