We are happy to share that Michelle Black of the HOPE Program has a featured article in At Home Magazine this month! You can pick up a copy of At Home Magazine at your local Harris Teeter, BP gas station, or Lowes Food Store. For your convenience, see below for a copy of the article as well:
Credit Myths Exposed! By Michelle Black, Co-Owner, HOPE (www.HOPE4USA.com)
It is extremely important to know who to trust when you receive advice on how to improve or alter your credit score in any way. Just about every one of us has, at sometime in the past, followed the wrong advice when it comes to our credit. Unfortunately, following bad advice can cause your credit scores to drop, sometimes very drastically. We will discuss a few of today’s most common credit myths in this article. Hopefully, by learning from the mistakes of others, you will be able to save yourself from the potential harm this misinformation about credit can do to your credit score.
Credit Myth #1: Closing credit card accounts lowers my available credit and will boost/raisemy credit score.
The Truth: This is probably the most common, most costly mistake that I see people make when trying to improve their credit scores. Many times I will meet with someone for a credit consultation and have them tell me, “I just paid off and closed all of my credit card accounts!” While it is always a sound financial decision to pay off credit cards, it is very bad for your credit score to close current credit card accounts. In fact, closing current credit card accounts will almost certainly cause your credit score to drop, sometimes tremendously.
When a client tells me that they have closed their credit card accounts the very first thing I advise them to do is to open some new accounts (if the recently closed accounts cannot be re-opened.) Closing accounts causes your proportion of credit used to go up, making you a higher risk in the eyes of the credit bureaus. This is one of the reasons your scores drop when current accounts are closed.
Credit Myth #2: Paying my credit cards off every month hurts my credit score. It is better to leave a balance on the card.
The Truth: The best way to drive your credit scores upwards quickly is to pay off your current credit card balance to $0 and to keep them there. By showing the credit bureaus that you are financially disciplined to pay off your cards and not use 100% of your available credit limit you will typically be “rewarded” by having extra points added to your credit score. Plus, by paying off your credit cards every month, you will not be paying interest on these accounts, saving yourself a lot of money. This small tip can pay BIG dividends both financially and with regard to your credit score.
Credit Myth #3: Paying cash and carrying no debt will increase my credit scores.
The Truth: Our credit reports provide a snap shot to lenders of our credit worthiness, that is whether or not we are likely to pay pack our loans on time. FICO reports that people with no credit cards are higher risks than people who have credit cards and use them responsibly. In fact, if we have no accounts showing up on our credit report then we are likely to have low or even no credit scores at all. In order to obtain good credit scores we must have the correct balance of open accounts reporting on our credit at all times.
These are just 3 of the most common, and most costly, credit myths you may come across. Check back next month for more information on credit myths and how you can potentially save yourself from the negative effects these myths can have upon your credit scores. We know that it can be very overwhelming to try to understand the intricacies involved with credit reporting. It is often nearly impossible for an individual to straighten out credit issues on his/her own. If you have low scores on your credit report, or even if you just want to improve your “good” credit report into a “stellar” credit report we would love to give you our professional opinion and advice.
In a little over 2 and ½ months alone the HOPE Program has had over 50 graduates to complete our program with credit scores healthy enough to qualify for a home loan! We would love to show you how you can achieve your personal success story as well! Please visit us online at www.HOPE4USA.com or call 704-499-9696 today for more information or to schedule your personal credit consultation. Our caring credit specialists are looking forward to hearing from you!