I am always surprised to learn how confused most people are about how credit works. Here four myths I hear most often about credit.
Myth One: Once something is in my credit file it will be there for seven years.
Truth: The Fair Credit Reporting Act provides consumer protection against inaccuracies in your credit file. If you dispute something, the responsibility is on the lender to prove that they are right. If they can not verify 100% that they are correct, then the credit bureaus must remove the account from your file.
Myth Two Past due collections should be paid immediately to raise my credit score.
Truth: When you pay a past due account, the late payment will still show up even though the account will be marked as paid. In some cases, paying off an older item will actually lower your credit score.
When you pay off an account, you renew the date that the account was last active. Because something recent is going to have more impact on your score than something that happened a long time ago, a paid collection with a recent date of last activity can sometimes have a more negative impact on your score than an old unpaid collection.
You still want to get these accounts paid. However, it is essential that you negotiate with the lender BEFORE you make payment as to how the account will be reported to the credit bureau. Make sure you get everything in writing before you pay anything.
Myth Three: Bankruptcy is the easy way out. I can get a fresh start.
Truth: Bankruptcy certainly has its time and place, but it isn't the best solution for everyone. Recent changes and law have made it more difficult to file. Even those who can still file should consider all of their options before they file bankruptcy.
A bankruptcy stays on your credit report for ten years. This means that you will pay a higher interest rate for everything " homes, cars and credit cards. You will also have to wait between two and three years after filing before you can qualify for a mortgage.
If you are considering a bankruptcy, one of the first steps would be to speak with your creditors. In today's environment they are much more likely to be willing to negotiate with you. If you can avoid filing bankruptcy, in most cases this is the best course of action.
Myth Four: If something is accurate, it can never be removed from my credit report.
Truth: Credit bureaus are required to confirm the accuracy of accounts when they are disputed. The Fair Credit Reporting Act gives lenders only 30 days to verify the account before the credit bureau is required to remove it from your file.
This means that if the creditor misses the cut-off date, the disputed item must be removed, even if it is accurate! The easiest items to take advantage of this are items that are older and things that were once past due but are now completely paid off. The reason for this is that your information can be difficult for the lender to find and they are much less motivated to take the time to verify than they would be if the item was currently in collection or past due.
Knowing what to do is half the battle in achieving your ideal credit score.
สมัครสมาชิก:
ส่งความคิดเห็น (Atom)
ไม่มีความคิดเห็น:
แสดงความคิดเห็น