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A second great myth about credit scoring is that if you just catch up on your payment and avoid going 90 days past due your score will recover. This is true to an extent as your score will bounce back but not entirely. The reason for this is that lenders update your credit reports only once a month. In the event that you have an account that is showing up as being currently past due, it will actually be that way for an entire month. And it’s likely that your credit score will be lower and even considerably lower for 30 days.
Many finance and credit card companies pull your credit scores every month just to determine if they want to continue to do business with you. This is called either “account management" or “account maintenance." When you review your credit reports you may find a long list of inquiries that fall into those two categories. The problem with this is that if a creditor pulls your credit score during their account management process and sees that it has dropped because you have a currently late account, it's likely to react by lowering your credit limits, closing your account or raising your interest rates.
Great myth #3: Your credit scores will take care of themselves if you just handle your finances responsibly
Remember what we wrote in an above paragraph that credit scores are a way to predict how you will handle credit in the future. If you quit using credit or use it in a way that the credit scoring formulas don't like such as using just one card, closing down a bunch of accounts or maxing out your cards – even if you pay them off in full – your scores could go down. This is because it will look as if you were having some problem with credit.
Great Myth #4: Checking your credit will hurt your credit score
The truth is that getting your own credit report and scores will not affect your credit scores. Period. On the other hand if you were to ask a friend or relative at a car dealership or bank to pull your credit reports this would likely be treated as a "hard" inquiry and would ding your credit score. But it's a non-event when you check your own credit.
This is a very bad myth because it can keep people from checking their credit reports to see what's going on with their credit and their scores. A recent survey found that about 20% of all U.S. credit reports contain errors and that 5% have errors so serious they are damaging people’s credit scores and causing them to be turned down for loans or paying much higher interest rates. You really need to go to www.annualcreditreport.com at least once a year to get your credit reports from the three credit bureaus so that you could dispute any errors you find. And if you're about to apply for a major loan such as an auto loan or mortgage, you should go to ww.myfico.com and buy your score so that you can see how lenders will view your application. Plus, you will get some good tips th`ere for improving your numbers.
Speaking of credit reports
If you'd like to know more about credit reports and how credit reporting works, here's a short video that offers some good information.