Check out our article in the December issue of At Home Magazine! You can pick up a copy of At Home Magazine at your local Harris Teeter, BP gas station, or Lowes Food Store as well.
Credit Myths Exposed! Part 2 By Michelle Black
Last month we discussed 3 very common credit myths and the impact they can have upon your credit report. Since there are so many credit myths, and since this is such an important subject, we will continue our article this month on the same theme. Misconceptions about credit and following bad advice can damage your credit score and could even cost you thousands of dollars. We encourage you to educate yourself regarding credit, take control of your financial future, and don’t let yourself fall victim to any the common credit myths listed below.
Credit Myth #1: I shouldn’t check my credit too often because too many inquiries can lower my credit score.
The Truth: You can personally check your credit report with no negative impact. You are even entitled to a free credit report every year at www.annualcreditreport.com. This is called a “soft” credit pull. A “hard” credit pull happens when a lender pulls your credit to see if you qualify for a loan. “Soft” pulls do not affect your credit score; however, “hard” pulls typically cost you 1-5 points and affect your credit score for approximately 6 months. So, while it is fine to check your own credit report often (HOPE recommends checking your credit 1-2 times per year), it can damage your score if your credit is pulled by a lender too often.
Credit Myth #2: One late payment won’t hurt my credit score.
The Truth: Payment history is actually the #1 factor used by the credit bureaus to determine your credit scores. Late payments can have a huge impact upon your credit scores. To give you an example, several years ago we had a HOPE client whom we had helped to clean up his credit report to the point where he could qualify for a great interest rate on his home loan. He was moving to North Carolina at the time. During the busyness of moving he forgot to make a $15 credit card payment. When his credit report was pulled later that month for his mortgage application his scores had dropped over 100 points! Thankfully, we were able to walk him through talking to his credit card company in order to request that the late payment date be removed due to the circumstances. Once the late was removed his scores recovered and he was still able to purchase his home.
Credit Myth #3: Once a collection account is paid the account will be erased from my credit report.
The Truth: Paying a collection account won’t automatically make the red mark on your credit report go away. In fact, a paid collection account can remain on your credit report for up to 7 years. Often times the creditor never bothers to update your credit report to reflect a $0 balance after receiving payment for a collection account. It is always best to use a professional debt negotiator, like HOPE, to make sure that your paid collection accounts are updated on your credit report properly and promptly.
Credit Myth #4: It’s best to work on cleaning my own credit report because all credit repair companies are scams.
The Truth: “Credit repair” has a bad name, for a good reason. Most credit repair programs are incomplete and, while they may help improve your credit report somewhat, they almost never help you to achieve a completely healthy credit status. It’s always best to work with a credit education program like HOPE which provides negotiations and personal credit advice in addition to the dispute services provided by your average “credit repair” company.
Also, everyone has the legal right to work on their own credit report. If you encounter a company that tries to misinform you regarding your rights, you should run the other way! Still, please keep in mind that while you are legally able to work on your own credit report it is usually best to have a professional to assist you when cleaning up past credit issues. You are legally allowed to represent yourself in a court of law as well; however, most of us would prefer to have an attorney represent us in order to ensure we receive the best result possible. Repairing your credit follows the same principle.
If you have credit issues or low credit scores which are keeping you from achieving your goals of homeownership or financial freedom please give us a call! HOPE can proudly announce that we have had over 70 graduates in the past 4 months alone to complete our program with credit scores healthy enough to qualify for a home loan! You can overcome the credit problems you are facing too and we would love to help you achieve a wonderful success story of your own! Please visit us online at www.HOPE4USA.com or call 704-499-9696 today for more information or to schedule your personal credit analysis with a HOPE Credit Specialist. We can’t wait to hear from you!