The Most Common Credit Myths Revealed

23 Feb

The Most Common Credit Myths Revealed.   One of the most challenging things to grasp in the home buying process is your credit score and how it works.  Many people “assume” they have good credit because they pay their bills on time etc.  However, the credit bureaus do not look at credit like you and I do.  So let’s talk about exactly what it is they do think and exactly what “they” consider “good” credit.    Read on .  .  . you might be surprised!
Common Credit Myths

• You may think that if you  have a lot of cash and you have a great income or that you have a good amount of equity in your home that your FICO score will not matter.   In reality your credit score will determine whether or not you qualify for a loan and what your interest rate will be.  There are a few exceptions to this:  if you pay cash or if you put down a much larger than normal down payment

• You may think that if you do not have any debt and no late payments that you have good credit.  This is the myth that shocks almost everyone because it doesn’t make much sense.  The credit lenders look a credit differently.  They consider financial responsibility and good credit two separate issues.  Your FICO score is used to measure how you manage your debt.  So if you have credit accounts they look to see if you use them regularly or if you abuse them

• Here is the tricky part of credit scoring that most people don’t understand.  If you have no credit and no debt does not mean you have good credit.  On the other hand, if you have credit and you are maxed out on many of your accounts or if you are constantly applying for credit; they consider this to be an indicator of credit abuse

• Believe it or not FICO will give you a top score if you keep your credit account balances  at 30% of your credit limit and you make your payments on time

• When was the last time you checked your credit?  If you are thinking about buying a home, now is the time to check your credit.  This will allow you time to fix any inaccuracies so that there are no surprises when you apply for your loan.

Additionally, the higher you are able to get your credit score could quite possibly get you a lower interest rate and over 30 years that can really add up.  FYI – make sure you check all three credit bureaus because each of them can have differing information

• Some people think that if they have had a foreclosure or a short sale that their credit report will be bad for seven to ten years.  However, some of the items on your credit report like late mortgage payments,  derogatory credit items, foreclosures and short sales will show up for seven to ten years, but your actual credit “score” can be fixed at least enough for you to buy another home.  Of course, this depends on several factors such as how much cash you have to put down, what type of loan are you trying to get and if you had any extenuating circumstances that caused you to lose your first home

• You may think that a short sale has much less effect on your credit score than a foreclosure does.   The fact is that short sales and foreclosures have the same negative impact on your credit score

Well there you have it.  The most common credit myths revealed.  If you are thinking about buying a home and you have credit issues that you are concerned about, contact your realtor to help you sort things out.  Your realtor has quite a bit of experience in helping people just like you buy a home.

About the Author:  Millie Gil has been a successful Licensed Real Estate agent for over 25 years in Florida.  Millie is Vice President of Bold Real Estate Group, a boutique agency committed to concierge personalized service for discerning buyers, sellers and renters of residential and commercial properties.  For more information please forward your request to

Serving Locally and Globally.  View thousands of new and resale homes:,, a Golf Style Private Community,  a 55+ Resort Lifestyle Community,

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