1. Your Score Will Increase if You Close Accounts

• One cause of lower scores is having too many unnecessary accounts.  While it's logical to assume that simply closing these accounts will raise your score, that's not the case.
• Closeing older accounts will make your credit history look younger, which can hurt your score.
• Additionally, closing accounts reduces the total credit available, which also hurts your score.
• This doesn't meant you should never close an account.  If you're being charged an annual fee, for instance, closing the account won't hurt much - especially if your score is already relatively high.

2. Getting Your Credit Card Company to Lower Your Limits Will Boost Your Score

• Narrowing the gap between your available credit and your debt can have a negative effect on your score.  It doesn't matter if you asked for the reduction.  The best way to increase your score is to simply pay down your debt.

3. Checking Your Credit Rating Can Hurt Your Score

• Credit bureaus understand the need to frequently check your credit information to guard against erroes and identity theft.

4. Shopping For the Best Rate Can Hurt Your Score

• Credit bureaus understand that many consumers want to make sure they're getting the best rate, so they usually give you a two-to-four week indow prior to a major purchase to make rate inquiries.
• In order to avoid dragging the process out, however, it's a good idea to do some research prior to making inquiries.

5. You Can Get a Good Credit Score Without Using Credit

• Some people think that living on a cash-basis will impress prospective creditors, but it's not true.  Only by establishing a reliable credit history will creditors feel comfortable lending you money.

6. Paying Interest is Necessary to Get a Good Credit Score

• Credit bureaus make no distinction between balances that are carried month-to-month, and those promptly paid off.  To get the highest credit rating, it's true you need to have installment as well as revolving accounts, but it's not necessary to have the highest scores to get the best rates and terms.

7. If You Have a Dispute with Your Lender, Adding a Statement to Your File Can Help Your Score

• While federal law does give you the right to attach such statements, they have no weight in the scoring.
• If the dispute is costly enough, it's probably best to pay the bill under protest than sue the vendor in small claims court.
• Fortunately, most disputes can be settled well short of such actions.  Use your credit card company's dispute resolution process, or work persistently with the vendor's customer service department.

8. Your Score Will be Hurt if a Closed Account Doesn't Read "Closed by Customer"

• Fair Isaac knows that if your account was closed due to default that will be otherwise documented.
• Since most lenders only look at your score, they don't care who closed the account.

9. Credit Counseling is Worse than Bankruptcy

• Bankruptcy is the worst thing that can happen to your credit rating.
• The current FICO formula ignores any reference to credit counseling.
• Some lenders, however, will reprot you as late just for enrolling in a debt management plan, figuring that if you're not paying what you originally owed, you should somehow be punished.

10. You can't obtain credit after Bankruptcy

• Even though bankruptcy deals a devestating blow to yout rating, it's possible to recover from it.  Before your case has even closed, you'll probably receive some credit card offers.  And six months after the bankruptcy, some lenders will even offer mortgages.
• Other lenders, however, might never offer you credit again.  You may have to seek out "subprime" lenders for credit, but beware - some of these charge unreasonable rates and fees.

Disclaimer:  This article is provided for information use only.  It does not take the place of an attorney, a tax advisor, or an accountant.  Always seek out the advice of a licensed professional before undertaking any significant change in your financial situation.

We at Victoria Massengale and Associates realize that you are in the information gathering stage of your purchase and we respect your privacy.  Should you have any questions, please feel free to e-mail us at VictoriaM@ColdwellBanker.com or call us directly at (310)887-0227.  If you, or anyone you know is looking to buy or sell a home, please note that we can provide detailed real estate information for any area of Los Angeles.