Below are the most common myths about consumer credit scores. Many of these myths are actually intuitively correct. However, in actuality, they are just not true. The most common consumer credit myths are:

Closing credit accounts will raise your score, right? Nope. Closing credit accounts can actually hurt your credit score for 2 reasons. First, one of the factors reviewed by Fair Isaac and other credit scorers is how long you have had the accounts open for. The longer the age of your accounts, the better your score. Hence, closing an old and established account will hurt your score. Secondly, closing an account reduces your overall available credit. This has the inverse affect of increasing your overall credit utilization. If you already have an excellent credit score, closing old accounts that you are not using is probably not a bad idea. If your credit is something less, then leave the account alone.

You can boost your credit score by asking your lenders to lower your credit limit.Just like closing accounts, this has the effect of increasing your overall utilization ratio of credit. The credit scorers do not distinguish between lower credit given by the creditor and that which is imposed by your request.

Checking your credit report often can hurt your score. Well, that depends on who is pulling your credit report. When a lender pulls your credit report, it leaves a footprint on the bottom of your credit report telling anyone else who looks at it that you have, presumably, applied for credit. This is what is called a “hard pull.” This affects your credit score. If you have your credit report pulled through proper channels such as directly by the credit reporting agencies, then these are “soft pulls” and leave no such footprint.

You can hurt your credit score by shopping around for the best rates . FICO knows that consumers want to shop around for the best rates, particularly for cars and homes. The FICO score ignores all mortgage and auto related inquiries made within a 30 day period. If your credit gets pulled by several auto lenders within that time period, for example, the FICO score assumes that you are shopping for a car and not repeatedly getting turned down.

Live credit free to develop the best possible credit score. This myth is clearly wrong because you have to have a credit track record in order for FICO to develop a credit score for you. Some people believe that the best way to game the FICO score is to show that one does not need credit to live. This is just plain wrong.

You have to pay interest to have a good credit score. You don’t need to carry a balance and pay interest in order to develop a good credit score. The FICO formula makes no distinction between balances you carry month to month and balances that you pay off.

Adding a 100 word statement to a trade line that you dispute will remedy the effect of the negative trade line. If you have a dispute with a creditor that results in a negative item on your credit report, you have the right to place a 100 word dispute on that report to present your side of the story to prospective credit grantors. However you should note that while the creditor’s negative item affects your credit score negatively, your 100 word dispute has absolutely no affect on that number. Rather, it will be up to the prospective lender to determine what credence to give to your explanation.

Your closed accounts should recite “closed by consumer” or they will damage your score. The fact is that the FICO score does not account for who closed your account. If your account was closed because you were chronically late, those late payments will surely be documented in the account.

Credit counseling is worse than bankruptcy. Nothing wrecks a credit report like a bankruptcy. The current FICO formula ignores credit counseling. This is treated neutrally. Credit counselors attempt to negotiate lower payments and interest rates from your creditors. Many times they are successful in doing so. But some lenders can be a bit vindictive and even though a new payment schedule may be negotiated, they may still report the payments as late because you did not pay according to the original schedule.

A bankruptcy makes it impossible to get credit. You can get a mortgage in as little as six months after your bankruptcy is discharged. You may even be able to get credit cards. However, you should be prepared to pay some unusually high interest rates. With a credit card, you may even be asked to make a security deposit. Still, these new lines of credit can help you re-establish your credit.

If you think your rights have been violated, call Attorney Gary Nitzkin, toll free at (888) 293-2882. The call is free and the advice is priceless. You can also email him at gary@micreditlawyer.com.

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