We all know what a credit score is this day in age. It follows us around our entire lives and is used for the purpose of judging the amount of risk we impose on lenders that decide to loan us money. With so much lending capital and, the desire for bigger and better that we’ve always had, your credit score is more important today than ever before. Of course, as with anything that is important to consumers, credit scores have generated quite the conversation and several questions. Here are the answers to some of the most commonly asked credit score questions.
Is It Possible To Build My Credit Score Faster Than A Year?
The truth is, I would love to tell you that it’s possible but, in that case, I would be lying to you. When we think about the importance of credit scores and what they portray, it’s simple to understand why it can take a year or longer to build your scores. Imaging being the lender that is issuing you a loan. Think about what it would take for you to give some person you don’t know hundreds or even thousands of dollars on a promise of a small profit. You would want to know that this person has paid their loans on time in the past. At least for the last year, if not two! The simple fact is, only consistency in payments alleviate risks imposed on lenders. The only way to show consistency in your payment habits is to show that you are capable of making payments over a long period of time!
How Accurate Are Most Credit Reports?
If you watch T.V., listen to the radio, read the newspaper or magazines, chances are, you’ve seen some ad for a credit protection service that claims that many credit reports are inaccurate. So, exactly how accurate are most credit reports and, should you be concerned about yours? The truth is, most credit reports are incredibly accurate. If they weren’t well, they just wouldn’t be credible! With that said, the ads you’ve read about, seen and heard aren’t lying either. Everyone has a credit report, with that said, there are bound to be some mistakes! You should always keep tabs on your report. You can do so for free at www.annualcreditreport.com!
Why Will Closing A Credit Card Account Damage My Credit Score?
If you talk to most financial professionals about closing a credit card, you will find out that it will most likely damage your credit score to do. That said, this has spread through the masses and the common thought is that no matter the case, closing a credit card will always harm your credit score. That’s not exactly the truth either. When it comes down to it, one of the factors included in the calculation of your credit score is the amount of time your accounts have been opened on average. The longer the average, the better. Therefore, if you do close a credit card that you have had for a long time, chances are, it may harm your credit score. However, let’s say you just opened a store credit card to get a bit of savings at the register. You earn the savings and now, you will never want to use the card again. This new card reduces the average amount of time that your accounts have been opened. Therefore, by closing this account, you will increase your average back to where it was and you will probably notice a positive change.
Final Thoughts
I hope that you’ve enjoyed my article. More importantly, I hope that I’ve given you the answers you’ve been looking for! If you have any other questions about credit scores, please feel free to ask them by leaving a comment below. I will respond, I promise!
About The Author – Joshua Rodriguez – This article was written by Joshua Rodriguez, proud owner of CNA Finance and avid personal finance journalist! Join the conversation about credit scores or any topic of your choice on Google+!
