Things People Should Not Assume About Credit Scores

A lot of people make bad assumptions about ways to improve credit

. Most of them seem like they would improve credit scores, but surprisingly they either do not help your credit score or they may even lessen it. Below are a few of those assumptions.

Don't assume that paying your bills through the post office will ensure it is paid on time. Paying through snail mail actually gives you a higher chance of being penalized for being late, since it can take anywhere from 7 to 10 business days. You also have a higher chance of identity theft by paying bills through the mail.

Top Myth - Inquiring at more than one location for the best interest rate will improve my credit score. Opening new accounts and having multiple credit inquiries open actually reduce credit ratings. Instead, wait 6 months in between credit inquiries. Another good rule of thumb is to only give out your personal information, such as your social security number, unless you are sure you want to buy the item.

Top Myth - Paying the minimum payment will ensure a good score. While paying your payments won't hurt your score, it is important to keep the outstanding balance of your bill low. You do not want to have the credit balance close to your maximum credit limit. So, if paying the minimum payment is making your outstanding balance 50% or more than the maximum amount you can use credit for then it will definitely hurt your credit, not help it.

Opening a new credit line that has a lower interest rate does not improve credit scores. Opening multiple lines causes worse scores on average. This usual depends on the number of inquiries that are open. Be sure to follow the advice and not open new credit lines until 6 months after your last inquiry.

Also, a lot of people have the wrong assumption about paying bills. While paying your bills on your due date will keep you from getting lower credit scores, it does not increase it. If you want to improve your debt ratio, and thus your score, go online and pay off your bill before the bill is even generated on paper.

Don't believe people who tell you that having a lower maximum credit limit will improve your score. How you keep your score in good standing is to keep your total balance low. Whether you have a $2,000 limit or a $15,000 limit you want to make sure that your balance is less than 50% of your maximum amount.

Top Myth - Closing my credit cards that I do not use will help my score. Unfortunately closing accounts reduces the average age of your credit line. This reduces your score, so it is best to keep your oldest lines open and if you have to close the newer lines.

by: Marcus Meilleur.

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