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Some Mistaken Beliefs About Credit
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Some Mistaken Beliefs About Credit

Have you every sat around with your friends, family or neighbors and heard their proven philosophy on building or managing credit? There are a wide variety of myths floating around about what you should and shouldn't do to manage your credit. Some appear to be good ideas but most can become costly mistakes. Let’s review a few of the urban myths associated with credit and credit management.

Closing old accounts is good - Many people believe closing old and inactive accounts is an effective means of managing their credit. But they should think twice before closing their older and more established accounts on their credit report. Canceling old credit accounts can significantly lower a credit score by making the credit history appear shorter. You should consider storing or cutting up a credit card you don’t intend to use instead of having it canceled or closed.

Paying off a negative record will remove it from your credit report - Negative records such as collection accounts, bankruptcies and late payments will remain on your credit report for 7 to 10 years. Paying off the account before the end of the term doesn't remove it from your credit report but it will cause the account to be marked as "paid." It’s still a good idea to pay your debts in full. Just be aware the major positive impact in your report and profile will be achieved when the negative records expire.

Co-signing for an account doesn’t make you responsible for it - When you open a joint account or co-sign on a loan, credit card or other credit account, you are taking on full legal responsibility. Your credit and capability to acquire new credit will be affected. If the party you co-signed for does not pay their bill it will have the same impact as if you didn’t pay. Any activity on these shared accounts, good or bad, will show up on both parties’ credit reports. If you co-sign for a friend's auto loan and they don't make the payments, your credit profile will be equally hurt by their actions or lack-thereof. The only way to stop this double reporting and negative impact is to pay the loan off or refinance the debt without you as a co-signer. In general, you should think twice before you co-sign for anyone. If you do decide to co-sign, consider keeping it restricted to responsible family members. .

Paying off a bill will add 30 points to your credit score - Your credit score is calculated using a complex mathematical formula that takes into account hundreds of factors and values. These formulas often change based on the economy. It is very hard to predict how many points you can gain by changing one factor. For a person with a high credit score, just one late payment can cause a significant drop. If a person has a low credit score, it may not cause a large drop at all. Just keep paying your bills on time, reducing your debts and removing negative inaccuracies from your credit report. Good financial behavior and time are the two most important factors for building your credit.

The ApprovalGUARD Service - Is the first and only service of its kind. Each ApprovalGUARD customer is assigned a personal credit coach to help them understand, evaluate and optimize their credit and debt profiles. The ApprovalGUARD Service additionally provides each Full Service customer with credit reports, credit scores, continual informative credit tips and education, and tools to more effectively manage and analyze their credit and debt profiles. Go to and use the promotion code: REMAX1 for your free 30 day, no obligation trial.

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