So the problem is how do is sift through the right informative material, that is the question.



Well we hope the following can add some clarity to many misconceptions over credit:

1. Payment of my debts will make my credit report Crystal clear instantly .

No not Exactly.They have to be in the timely matter agreed upon signing of Credit obligation.

A credit report is a history of your payments, not just a snapshot of where you are at the moment, says Maxine Sweet, vice president of public affairs for Experian, one of the three major credit reporting agencies.

As the author of the popular Web column "Ask Max," she continuously reminds people that you can't change the past. Credit counseling always destroys my credit score.

Attending a credit counselor's debt management program is not considered negative in the scoring models.

However, if the credit counselor negotiates a lesser contractual obligation, the lender decides how it wants to report that.

So if your $500 monthly payment is refigured for $300, the creditor may either legally report that as $200 in arrears every month or reward you for not filing bankruptcy by reporting the account as up to date.

Although credit counseling does not by itself influence your credit score, it is apparent on the report that you've been through, or are currently in, counseling -- and that is something individual lenders may not like. Or they might never know.

Too many Open accounts spells available, potential debt, so better to close them, runs the legend.

But experts agree that most creditors want to see at least two or three pieces of active credit to prove you can manage debt responsibly.

And, Watts chimes in, those unused cards lying in your jewelry box aren't wreaking havoc with your score.

"The myth is that they look ominous to potential lenders," he says. "Reality is that paying your bills on time and not being overextended is more important than having $5,000 worth of available credit on a card you're not using.

We continue to evaluate this 'total credit limits' statistic, and we simply don't find it falling into one of those highly predictive areas."

On the other hand, extremes never look good. Opening one charge account occasionally to take advantage of a 10 percent offer is negligible. Going wild and signing up for five during the holiday season probably would invite a decreased score, he says.

2. Alot of inquiries hurt my score.

Once upon a time, this statement was true. But get with the times -- in this millennium, the credit agencies recognize a shopping mind-set when they see one. If a batch of mortgage or car loan inquiries arrives within 30 days, it doesn't count at all, Watts says.

"Outside that 30-day period, if we locate a mortgage or car inquiry that occurred 180 days ago, and then see more mortgage- or auto-related hits in the accompanying 14-day window, we err on the consumer's side and still assume she's shopping for one item," he says.

"We really feel like we are capturing the true consumer experience and not holding it against them for being an aggressive or smart rate shopper."

3. Checking my own credit report harms my standing.

The reporting agencies distinguish between soft and hard pulls. When Target calls to check before issuing its line of credit, the agencies chalk that up as a hard pull and it counts against your score. Personal requests and credit counselors -- if they do it correctly, so insist on this as part of your agreement terms -- fall under soft pulls, which do not reflect negatively on the evaluation.

Using a company that promises credit reports as a perk can turn this myth into a self-fulfilling prophecy, however, McNaughton says.

Because they are merchants in disguise, their freebie costs you. Citizens must go directly to the three bureaus if they want a soft pull. Ditto FICO.

"Pulling your credit scores is quite empowering," says Watts. "You have a choice: You can either be very aggressive with your credit management and pull your score with some regularity or take a more passive approach once a year to see how all those credit cards are actually doing."

4. Credit scores are locked in for six months.

Fair Isaac Corp.'s models are dynamic, meaning that your FICO score changes as soon as data on your credit report change.

"When we calculate a score, for all intents and purposes it then goes away and is recalculated the next time someone pulls your file," says Watts.

5. I don't need to check my credit report if I pay my bills on time.

It is prudent to monitor your Credit report on a monthly Basis.

When the Consumer Federation of America and the National Credit Reporting Association analyzed credit scores in the summer of 2002, they discovered that 78 percent of the files were missing a revolving account in good standing, while 33 percent of files lacked a mortgage account that had never been late. Twenty-nine percent contained conflicting information on how many times the consumer had been 60 days late on payments.

"There can be a lot of other activity going on that you don't have any clue about.

Over 85 percent of all credit reports have erroneous information ranging from a wrong birth date to accounts you never applied for.

6. All credit reports are the same.

Way wrong. These days, most creditors across the country do report their information to all three major agencies: Equifax, Experian and TransUnion.

And, because they are separate companies, the speed in which they update records isn't necessarily equal.

7. Bad news comes off in seven years.

Some of it does. Chapter 13 (reorganization of debt) disappears seven years from the filing date. But if you filed Chapter 7 bankruptcy (exoneration of all debt), the window is 10 years from the filing date.

On the good-news side, accounts in bankruptcy can be deleted seven years after the date of your first missed payment, so those individual pieces may disappear before the word "bankruptcy" on your report. And if you pay off or close an account that had no delinquencies or problems, it, too, remains on the record for 10 years rather than the previous seven, say Experian experts. Again, this means positive information hangs around longer, as a consumer benefit.

8. I can always pay someone to fix or repair my credit.

Yes, you can clear up erroneous information posted to your account, such as a repossessed car that you didn't purchase in the first place, but if you paid your Sears bill three months late in 1997, that's a hard fact.

Companies claiming to fix your credit deliver on their promises by generating a flood of dispute letters to the credit reporting agencies, which in turn ask the creditor to verify or document the entry. If they cannot, the listing must come off at that time. But if the creditor later does verify or document it, the agency slaps it right back into the file after 30 days.