It is important to review your report regularly because both you creditor and the reporting agencies can make mistakes. Here are some myths about your credit score and report that may help you manage your credit score.



1. The less credit I have the better my score will be. Actually, no credit is as bad as poor credit. The credit bureaus want to see that you can manage your finances responsibly. You have to have credit to prove this.

2. All I have to do to fix my report is to pay off my debts. Paying off your debt is a good start but your credit report is a running history of your credit. Over time as you continue to pay off debt in a timely manner, your history will reflect that and the bad stuff will eventually come off and be replaced by good.

3. My credit report is cleared after seven years. If you file a chapter 13 bankruptcy the bankruptcy will clear 7 years after you finish paying it off. A chapter 7 bankruptcy takes 10 years. Everything else, good and bad stays on your record for 10 years.

4. No one sees my credit report unless I say it's okay. Actually the only entity that needs your permission to access your credit is a prospective employer. Anyone else who as a "permissible reason" can pull your credit. However, they will need your social Security number to do so. Guard your number closely and keep track of who you give the number to.

5. Lots of inquiries will hurt my credit score. This is a myth that is commonly spread by a lender that does not want you to shop around. If you have multiple inquiries for a mortgage or large ticket item, the credit bureau will assume you are shopping around for the best deal and they will treat all inquiries within a 45 day period as one inquiry.

6. Requesting my own credit report will hurt my score. Credit bureaus can tell if a business is pulling your credit or you are checking your credit. Pulling you own credit is considered responsible so it does not go against your score.

Be careful of companies that promise you a free credit report because they show up as a business pulling a report on your behalf. Go directly to the reporting agency or to www.annualcreditreport.com. The other websites are: www.experian.com, www.equifax.com, www.transunion.com. Also you can get your credit report for free but you generally have to pay for your credit score.

7. Closing my credit card accounts will better my credit score. Credit experts generally agree that once you have opened a credit card it is better to keep it open. Having a lot of credit cards with balances isn't healthy for you finances or credit, but you need to have at least two or three revolving credit accounts in good standing to boost your credit score.

8. I have to keep a balance to have a good credit score. Keeping a balance on your credit cards is unnecessary and can cause you to pay interest that you don't need to pay. The credit bureaus care that you pay on time and it does not matter if it is the full balance or a payment.

9. Using credit counseling will hurt my credit score. This used to be true. Being in counseling in and of itself does not lower your score. However, if the counselor negotiates a lower payment or payoff it can be reported as "in arrears."

Also, it is reported that you are in counseling and some lender consider that as your inability to manage your finances. Also you run the risk of the counseling company not making the payment on time which will affect your score. Anyone who promises to "fix" your credit score is simply not being honest with you.

10. I can increase my credit score by paying on my collection accounts. If you have an old collection account it is better not to make payments on that account. If you wait until you have the full amount you can often negotiate with the creditor to pay it off in exchange for a letter of deletion which will remove it from your report.

Credit is a delicate thing. If you have had credit problems in the past there are many lenders who

who will work with you but at a higher interest rate. Having a small amount of credit can help rebuild your score. For more information I recommend the book "7 steps to a 720 Credit Score," by Philip X. Tirone.