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Common Credit Misconceptions
Credit Report Myth #4Large Loans such as Mortgages and Car Loans Hurt Your Credit Report
As long as you make payments on time and do not max out your loans or credit accounts, no loans or accounts really hurt your credit report.
In fact, large loans such as mortgages that you repay for a long time to the same lender can actually work in your favor by showing that you can make payments on time. Also, while many home owners grumble about their mortgages, larger loans are often less likely than other types of loans to create problems. Most people pay loans on larger items first, especially. Larger loans also tend to be quite stable, with low monthly payments and decent interest rates.
When people face problem debt, they tend to get into trouble with unsecured debt such as credit cards. These debts are easier to take for granted while they remain small. As a result, customers may tend to forget to pay these debts on time. Plus, with their higher interest rates, these debts can quickly grow. You can have a great credit report with any sort of debt - as long as you only get a debt load you can handle and then take care to pay that debt regularly. This will help you control and manage your debt and keep your credit report healthy.
Credit Report Myth #5Having Money is What Cures Your Credit Report
Many customers believe that if they only had more money, all their credit problems would disappear. This is simply not the case. Your income is not even reported on your credit report and it certainly is not counted towards your credit rating. What matters on your credit report is whether you can handle the financial responsibilities you have. Anyone - even someone very affluent - who is living beyond their means, will find their credit report suffering. More money right now may help you to pay off your debts faster today, but it will not really help you manage your money more effectively. Learning to live with the money and income you have now is the best way to ensure financial health.
As you consider these common credit report myths, think about which myths you have mistakenly believed in the past. Now that you have the facts about credit reports and credit ratings, you can act from an informed position to make the best financial decisions for you.
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