Credit Misconceptions

1) Credit reporting is a bad thing: WRONG! Only if you have really really bad credit. Even then, there are ways to improve your credit. In reality, the credit reporting industry has done far more good than harm:

New Hampshire home loans are now far less expensive and much faster to get, largely because of credit reporting. With the help of the credit reporting tools available today, we can tell you within minutes what your mortgage options are.

2) Bad Credit will ruin my life: WRONG! There are many things that can ruin your life (use your imagination). Bad credit doesn’t have to be one of them. Your credit is just one of the factors in the credit approval process. Besides, your credit can be improved.

3) Closing old accounts will improve your credit score: WRONG! NO! Closing an old inactive account will not improve your credit. In most cases, it will lower your credit rating / score because it will make your credit history appear shorter.

4) Once you pay off a debt, it is removed from your credit report: WRONG! Let’s get this straight: the balance owed will be removed from your credit report or marked as “paid”. Whether favorable or derogatory, all your accounts are part of your credit history and will remain on your report for 7-10 years.

5) Being a co-signer doesn’t make you responsible for the debt: WRONG! When you open a joint account or co-sign on a loan you are taking on legal responsibility for the account. Any activity on these shared accounts, good or bad, will show up on your credit. If the other party doesn’t make the payments on time, it hurts your credit the same way.

6) Paying off a debt will add 50 points to your credit: WRONG! You wish it was that simple: Your credit score is calculated using a complex algorithm that takes hundreds of factors and values into account. It is very hard to predict how much changing one factor will affect your credit score.

Have a question about your credit and qualifying for a mortgage in New Hampshire? Call Charley Farley at (603) 471-9300 or e-mail charley@charleyfarleyhomeloans.com.