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Video: 5 myths of building better credit

 

 

Intro: Credit has long been viewed by many as a mystery. We know what it is and we know we need it…we're just not exactly sure how to best utilize it for our maximum benefit. Bankrate.com separates fact from fiction when it comes to building better credit.

Take VO:
Many people may think that paying off delinquencies will restore their credit score. While paying a debt is a better move than not paying it, the delinquency will stay on your credit report for seven years. To improve your credit score, get current and stay current on your credit accounts.

There's a happy medium when it comes to the amount of credit you have. Opening too many accounts makes you top heavy, creating more risk and your credit will reflect that.

SOT: Janna Herron, Credit/Credit Cards Staff Reporter, Bankrate.com

("If a lender sees that a borrower has opened a lot of accounts in a short period of time. The lender thinks "Is this person having trouble financially and needs access to cash fast.")

On the flip side, closing accounts gives you a smaller amount of available credit - hurting your credit score. A good strategy: Think long-term when it comes to credit.

Smart financial moves don't always help your credit score. Paying off your loan early saves you interest but it won't provide much a boost to your credit rating. Make sure you have open credit accounts in good standing to keep improving your credit.

If you pay your balance before the due date, it must raise your credit score, right? Wrong. That's because the balance of the account has already been reported to the credit agencies. Play the game smartly by paying the balance before the statement closing date or by cutting back on your credit card spending.

Tag: Looking to learn more about improving your credit? Just log on to Bankrate.com. I'm Kristin Arnold.

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