• 19
  • September
    2011

Over the last three posts we have addressed the issue of credit problems and credit scores by dispelling myths that surround the process of improving your credit score. In this post we will finish that discussion.

The seventh myth that people believe improves their credit score is paying before the due date. A person's credit score factors into the available credit the person is using. The early full payment of a credit card balance one week or one day before the scheduled payment date will not improve the person's utilization ratio. However, if a person pays the full balance of their card before the statement closing date, then the credit report will reflect the lack of a balance for the account. Therefore, the utilization ratio will be improved which will improve the person's credit score.

All payment delinquencies are not treated the same on a credit report. Missing a mortgage payment is rated differently than missing a car payment. A car payment is treated differently than missing a credit card payment. The larger the debt, the more weight the missed payment will carry on the credit score. Making a minimum payment helps ensure that the account is kept current.

The final myth that surrounds credit scores is that people believe they cannot have any negative information on their credit report. According to an industry expert, "You can have anything from a 30-day missed payment to a bankruptcy on your report and still have a really good score."

The more important part is when the negative information occurred. More recent information is weighted more heavily than older information. To fix a bad credit score there is no quick fix. Good payment behavior over time will build a better credit rating.

Source: foxbusiness.com, "Nine myths on how to build better credit," Janna Herron, Sept. 8, 2011