Bohemia, NY (PRWEB) May 25, 2013
On May 25, debt collection expert John Monderine discusses common misconceptions about credit scores.
A May 27 article from Business Insider, “9 Mistakes That Can Kill Your Credit,” discusses key mistakes that seem beneficial but in the long run can potentially harm your credit score. John Monderine responds, highlighting five of the list’s items.
1. “Closing Credit Card Accounts”:
This is a commonly-perpetuated myth, reports the article. “Closing an account will not increase your credit score,” says Monderine. “In fact, it can be nearly as detrimental as missing a credit card payment.” Short credit history due to irregular use sends a red flag to credit card companies, according to the article, “because a credit score favors a long credit history, with accounts that you’ve held for many years,” and “the length of your credit history counts for 15% of a FICO score.”
2. Over Utilization of Available Credit Card Limits:
High credit card balances will decrease your credit scores. Also known as “overutilization,” consumers are better off using cards, “sparingly” in order to, “pay them down as much as possible each month.
3. “Excessively Shopping for Credit”:
Credit applications allow lenders to access your credit report. Lenders also conduct an “inquiry” which is, “a record of who pulled your credit report and on what date.” “Inquiries can hurt you, too,” says Monderine. “Lenders and analysts find that consumers with more inquiries are a greater credit risk, so remember that shopping around for credit can raise red flags.”
4. “Thinking that All Credit Scores are the Same”:
There are different kinds of credit scores. According to the article a credit risk score is the most commonly-used kind, since it can help determine “whether or not a consumer will pay their bills on time in the future.”
“Not all scores are created equal,” says Monderine. The article claims that if consumers are, for example, “in the market for a new car and you purchase an educational credit score ahead of time for your own information, the score you get might be different from the score the lender is looking at.”
5. Not Understanding Rights According to The Fair Credit Report Act:
Consumers are often times unaware of their rights as a consumer. “FCRA is a list of the rules and regulations that govern lenders and the credit reporting agencies.” Information pertaining to, “legal reasons why your credit reports can be accessed, Your Right to Dispute Your Credit Information and Your Right to a Free Copy of all Three of Your Credit Reports” is discussed in the act.
“If you have debts that are at risk of going into collections,” says Monderine, “be sure to do your research and inform yourselves of your rights by reading the Fair Debt Collection Practices Act. This is an important piece of legislation that protects consumers from abusive collection practices.”
Founded in 2006, Rapid Recovery Solution, Inc. is headquartered at the highest point of beautiful Long Island. Rapid Recovery Collection Agency is committed to recovering your funds. We believe that every debtor has the ability to pay if motivated correctly. We DO NOT alienate the debtors; we attempt to align with them and offer a number of ways to resolve not only your debt but also all their debts.