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Four credit score myths

Today I wrote about a reader who wondered why her credit score isn’t as high as she expected.

But in the course of reporting a few credit score myths popped up.

Among them:

Myth: Employers look at your credit score. Employers will peek at your credit report, particularly if you’re applying for a job in which you’ll be handling lots of money. But not your score.

Myth: Carrying a credit card balance is good for your credit score. “You want to show activity…that  you are using credit,” says Barry Paperno, consumer affairs manger with myFico. But you can pay off the cards every month and still see the benefit to your score. Besides, you don’t want to pay finance charges by carrying a balance, he adds.

Myth: By closing a credit card account you lose the benefit of that history.

If you close a credit card account, the amount of debt you’re carrying in relation to available credit limit can go up and damage your score.

But a credit score is also made up of the average age of your credit accounts. The older the better.

Closed accounts stays on credit reports for a certain period and are a factor on  the average age of your accounts, says John Ulzheimer, president of consumer education for SmartCredit.com. At least two credit bureaus, he says, keeps such information on credit reports for 10 years..

Not only that, he says, these closed accounts keep aging. So if you open a card at Macy’s tomorrow, and close it the following day, that account will continue to age while it remains on your report, Ulzheimer says.

Myth: Opt out of credit card offers improves your score.

Ulzheimer says this myth has popped up recently and he’s not sure how. But opting out of card offers has no impact on your score.

 

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