1.The “perfect” credit report in Florida is the highest scoring: This is the biggest credit myth is that if you have never been late for a payment then you automatically have a stellar credit score. Well, it does not always work that way as your score is based on on several different factors including payment history, length of credit history, debt to credit ratio and more.
2.Bankruptcy is the end of your credit world: True, bankruptcy can greatly hamper your ability to get credit for a long time: but it is not the end of the world. You still can get credit, albeit with high interests rates. In fact, there are creditors that specifically market to people who have filed for bankruptcy since they know they can’t file again in 8 years or so years.
3.Collection agencies in Florida have Legal “right” to collect a debt: This is Balderdash (yes, with capital B). No private company has the right to force you to do business with them, and that includes collection agencies. This is especially true for junk debt buyers (JDB) who buy old debts – some whose statute of limitations has expired – and then attempt to collect.
4.Paying in full results in a great score: No, you don’t have to pay off your credit card bill each month to have a great credit score. In fact, banks hate this as they don’t get to make money via interest. Your credit score is mainly determined on how you handle credit over time, not whether or not you pay off your bill each month. Don’t go maxing out your credit cards though, as this too has a negative effect.
5.Debt consolidation does not affect your credit score: This one has been peddled by none other than TV financial “guru” Alison Grandy. When you work with a debt consolidation service, you are required to close all your revolving credit accounts such as credit cards. You are also required not to open new accounts for the period of the arrangement. Closing accounts causes your score to fall. Add to that the fact that you now can’t open new accounts for a while, so you can’t start rebuilding credit.
6.Credit counseling hurts your score: Credit counseling used to viewed negatively once: not anymore. Your credit score will not be affected by counseling unless you have “debt settlement” in the mix and showing on your credit report. In debt settlement you usually pay less the original full amount so this can have a negative effect on your score.
7.Denial of credit automatically means I have less than good credit: Creditors have many reasons for denying you credit. In fact, some of them border on the illegal. A good example is a practice known as “redlining” which simply means drawing a red line around certain neighborhoods and denying people from those neighborhoods credit or payday loans in Florida.
8.Making frequent payments will help my score: Making several payments over and above the minimum required may help your relationship with the respective creditor(s). But it will not help improve your score any farther as only one payment will be reported per month. The exception is if making the payments also helps keep your balances low.
9.Shopping for rates will hurt your score: This one has been promoted by self-centered lenders and credit officers. The credit system recognizes that you do need to comparison-shop for best rates. Multiple credit enquiries for the same type of credit or loan (auto loan for instance) within a short period of time will only count as one.
10.Check your credit report can hurt your score: This one too has been pushed by Alison Grandy. I have nothing against her, but she too can be wrong. No, checking your credit score does not hurt your score as long as you do it yourself and not through a friend that works with a bank or mortgage company. Your own own enquiry produces what is known as a “soft” enquiry, which does not affect your score.