When you’re in the market to purchase a home, you‘ll often be told different pieces information about what you should do with your credit. Be aware that not all the information you might hear is true! Review the top credit score myths we debunked below, so you can determine the best plan of action when it comes to your credit and purchasing a home.
Myth
It’s best to close credit accounts: FALSE
While having too many open accounts may hurt your score, closing an account puts an end to your credit history with the creditor. Your credit history is a vital part of calculating your credit score. If you want to improve your score, it is generally better to pay down your balances than it is to close your accounts, especially older accounts.
Myth
Ordering a credit report will lower my credit score: FALSE
If you’re in the market for a new home and you need to inquire with several lending companies, it’s a good idea to do so in a short period of time. Multiple inquiries within a 45-day period are generally treated as a single inquiry.
Myth
Paying-off a Collections Account will remove it from my credit report: FALSE
Generally, negative records, such as collection accounts and late payments, will remain on your credit report for up to seven years from the date of your last delinquency. Paying off the account sooner doesn’t mean it’s deleted from your credit report; instead, it’s listed as “paid.”
Myth
Co-signing doesn’t affect my credit: FALSE
If you open an account jointly, or co-sign a loan, you will be held legally responsible. Activity on the joint account appears on the credit reports of both account holders.
Myth
Paying-off debts boosts my credit score immediately: FALSE
It’s almost impossible to calculate the difference in points by changing one factor of your credit score. Over time, a history of good credit decisions will have the most significant impact on your score.
Myth
Seeking credit counseling will lower my score: FALSE
While this type of counseling may alert potential lenders of a credit concern, most lenders look at the bigger picture. Some even see consumer credit counseling as a positive sign of a commitment to improve your credit payment habits.
If you have any questions regarding your credit score or about the home buying process, don’t hesitate to reach out to one of our team members today!
