The media, newspapers, internet are full of information, but sadly, much of the information concerning credit is inaccurate. Let’s check out some common credit myths:
Credit Myth: “Your mortgage broker can use the credit report you obtained from Annual Credit Report.” If only it were so simple! But, not so www.annualcreditreport.com’s annual credit report is weighted differently than a lender’s credit report. There are different types of reports to get. From a lender’s perspective, there are reports where different factors weigh differently, based on what the lender’s requirements are. For instance, an automotive lender will get an automotive-based score. More weight is put on your client’s auto credit than anything else in their auto score. That’s very different than a standard consumer report.
Additionally, a mortgage lender will get a mortgage-based report, and a consumer finance lender will get a standard finance-based report. Each one of them is factored differently. Additionally, lenders can customize the FCRA model based on what their requirements are. If your client has a lender that is lending on auto, for example, they may not be as concerned with your client being late on credit cards, as a credit card company. A credit card company is going to be more concerned with looking at how timely your clients are with credit card payments, to decide whether or not they’re going to extend any more credit. So these are things that most people don’t know.
Credit Myth: “If you’ve got too many accounts it will hurt your credit score, therefore you must close excess accounts.” This is a huge myth because of a couple of key things … Remember! That a full 15 percent of your client’s score is based on the average age of the accounts. The more accounts that your client has that are older in age, the better the average age of the accounts will be, which will affect your client’s score.
Additionally, thirty percent of your client’s score is based on the utilization rate. If your client has more accounts that they’re not using, but still keeping them active, it’s definitely going to help the score by keeping those accounts going, because the overall utilization rate will average out less. Therefore, never close accounts. Closing accounts will not hurt your client. That doesn’t mean you should have your clients go out and get thirty accounts, whatever accounts the consumer has now, advise him to keep them open, there’s no reason to close them. But if they don’t have a large amount of accounts, there’s no reason to go out and get more accounts.
P.S. DisputeSuite provides a variety of solutions for your credit repair business. From engaging custom websites, to dispute processing services, to a robust CRM with automations and portals, DisputeSuite is a One-Stop Shop to making your Credit Repair Business A Success!