Are you well-versed when it comes to your credit? If you’re not, don’t worry: You aren’t alone. Many people have false notions when it comes to their credit and credit reports. Whether you’re trying to get out of debt or preparing to make a major purchase, understanding exactly how things work is important. Here are five common myths about your credit that you may have bought into:
1.Checking Your Credit Hurts Your Score
While it’s true that too many credit checks by creditors can hurt your score, checking your own report does nothing. In fact, you can check your credit report every day if you are so inclined. While checking your report daily may be a bit excessive, checking it at least once per month is a good idea. The more frequently you check your credit report, the more likely that you’ll be alerted to identity theft or misinformation.
2.Missed Payments are Removed Once the Debt is Paid
If you’ve never pulled your credit report and taken a good look at it, this myth is an easy one to fall for. Most debts stay on your credit report for up to seven years after they have been paid off. This means that each and every missed payment you’ve had will remain on your report for up to seven years after the debt has been paid in full, particularly if you’ve been sent to collections.
3.Credit Repair Companies Can Rid Your Report of Negative Information
Never pay a credit repair company to clean up your report for you. There is nothing that you will pay these companies to do that you can’t do for yourself. Many of the so-called “credit repair” companies simply negotiate on your behalf, disputing negative information. With a bit of know-how, you can do this on your own for free. Any person is able to dispute information with all three of the major credit bureaus. If you have proof to document the erroneous information, the credit bureaus will often side in your favor.
4.Married Couples Share a Credit Report
While you should have concerns about marrying someone with terrible financial habits, your credit score need not be one of those concerns. Each person has his or her own credit report and score. Marriage and divorce have no effect on your credit report; it’s the shared debts that have an effect. Any joint loans or debts that you take on will show up on both of your credit reports so make sure they are handled responsibly.
5.People Who Pay Their Bills Don’t Need to Keep an Eye on Their Report
Yes, you pay your bills on time and your credit report should be spotless. But is it? You won’t know unless you take a look at it. It’s not unusual for credit bureaus, credit card companies and even banks to make mistakes. Let’s not even mention the possibility of identity theft. It makes good financial sense to pull your credit report at least biannually, even if you are smart with your money.
If you’ve never had opportunity to look at your credit report, do so as soon as possible. Getting to know the ins and outs of your report is the first step in understanding what creditors see when they are deciding whether to approve your loan application. Keep in mind that some prospective employers will pull your credit report as well. Not knowing what lies within your report can hurt your financially; in more ways than one.
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Lewis Layton blogs for Credit Fox. If you have questions about your credit and wonder if you should close accounts to improve your credit score, check out his other articles.
