Getting Out of Debt Fast

The Truth About Your Credit

It is important to know the truth about your credit and were you stand, especially with your credit score. Here are a few common and sometimes very costly misconceptions about credit.

Most people believe that they have one credit score and it is locked in for a full year. The truth about your credit is that it is constantly being recalculated every time your credit report is pulled. You will want to review your credit report every six months or yearly to check for inaccuracies.

Most people believe that if they check their credit score to often that it will lower their overall credit score. The truth is that when you check your score it is considered a soft inquiry and has little to no bearing on your overall credit score .

Another misconception is that closing unused accounts will improve your credit score. The truth about your credit score is that by closing accounts you also lower your total available credit. Part of your credit score is determined by your total available credit in relationship to how much credit you are using. If you close an account, you not only lower your available credit but you erase a portion of your credit history.

Paying cash and carrying no debt will not help with your credit score . If you have no credit history than you will be considered a higher risk by lending institutions. Apply for a credit card and pay off the balance every month to establish a good credit history.

If you have stopped paying on a loan or credit card and it gets turned over to a collections agency, paying off the debt will not automatically remove it from your credit report. Paying off the debt is the responsible thing to do but the collection agency information could remain on your credit report for up to seven years.

The truth about your credit is that even one missed payment can affect your credit score. Credit agency's look at how well you have paid in the past to determine your credit score.