October 13, 2006, Newsletter Issue #33: Know the truth about credit scores

Tip of the Week

There are lots of false rumors on how to improve your credit score. Here's a list of popular myths and misconceptions and the actual truths behind them:

* Myth: Your credit score will drop if you check your credit score.

Fact: Checking your own credit score will not affect the credit score at all. However, it is important to check your credit score through the right service. Checking your credit score through a friend who is lender or auto dealer may accidentally damage your credit. Your credit score can be negatively affected if lenders are regularly checking it, which is why you should limit your credit applications.

* Myth: Closing accounts will help build you credit score.

* Fact: Canceling accounts can actually hurt your credit score. Also, closed accounts remain on your credit report.

* Myth: As a co-signer to an account, information from this account will not help or hurt your credit score.

Fact: Any account you co-sign appears on your credit report and affects your credit score, just as if it were an account of your own.

* Myth: Paying off a debt will add 50 points to your credit score.

Fact: Credit scores are developed through complex algorithms. You can't guarantee that paying off a debt will add a specific number of points, though it always helps to pay your bills.

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