One of the first things I quickly discovered when I began the process of fixing my credit was that many of things I had heard about credit were completely false. Here is a list of the most common myths about credit.

1. Canceling credit cards will improve your credit score. False!

   This is untrue for the simple fact that one of the largest determining factors of your credit score is age. In another words, by closing credit card accounts, in most cases, you are shortening your average credit account age. Many times this is advised by credit counselors for people who cannot control their spending, however, this does not translate into a credit score improvement by closing accounts.

2. Paying down installment debt will increase your credit score. False!

   Paying down installment loans such as student loans, personal loans, and mortgages will not improve your credit score. In short, FICO does not care about the amount of the loan –just that it’s being paid on time.

3. I only have ONE credit score. False

   The fact of the matter is, in most cases, you have THREE credit scores. Yes, there are three major credit agencies and while FICO uses the same method to calculate your credit score between agencies, there are usually minute differences between each credit report you have with these three agencies that translate into three different scores. What does this mean? It means that your credit worthiness partly depends on which credit report happens to be pulled when you apply for credit.

4. Once a negative entry is put on a credit report, there is absolutely NO way to get it removed until the required 7 years is up. False

   There are several methods that you can employ to remove negative entries from your credit report. In fact, I can say that the worst (credit wise) items on my credit report I got removed by sending off various letters. Try to negotiate with the free negotiation and dispute letters I offer to my readers.

5. Holding a credit card balance is good for your credit. False

   Actually, it’s the opposite. While it’s good to have credit card activity, the best way to improve and maintain a good credit score is to keep either a very low balance or no balance at all.

6. When multiple people apply for a home loan, ALL of their credit scores are taken into account. False

   If, for example, you and your spouse are applying for a home loan, the only credit score that matters is the person with the HIGHEST income. Note: This is general practice. Some lenders do take all borrowers into account.