There are a lot of companies and professionals giving their advice on how to improve your credit score, but take it with a grain of salt. Some of these people do not actually know what they are talking about and are giving bad advice – advice that can hurt you.
The reason there is so much bad advice is that no one really knows exactly how your credit score is calculated. There are only theories. The Fair Isaac Company has never released exact details to the public on how they calculate credit scores. Most of what is known is from trial and error. Here are just a few:
Close Credit Accounts Because You Have Too Many: That could be one of the worst moves you can do. One of the biggest factors FICO looks at is how much credit people have extended to you compared to how much you have used. The closer you are to maxing out your available credit, the more it will hurt your score. When you close accounts, you squeeze your available credit.
Bankruptcies Will Always be on My Credit Report: Wrong again. Bankruptcies only remain on your credit report for 7 years, and in some cases 10 years. After that they are removed from your credit report and will no longer affect your credit score negatively. In some rare cases, bankruptcy filing may be the best solution.
You Need a Professional to Fix Your Credit: There is very little a professional credit repair company can do that you can’t, it’s that they know what to do. If you have the time to do your homework and repair your credit on your own you can save hundreds, even thousands of dollars in legal fees. It is entirely possible.
