It wasn't all that long ago that
American's faced great financial crisis. As a nation, we struggle
with debt, and it keeps us from achieving a better life. Debt
Education is here to help you change all that ... just ask!
REAL PEOPLE ... CARING ABOUT REAL
ISSUES
Facts & Fallacies
Fallacy: My score determines whether or not
I get credit.
Fact: Lenders use a number of facts to make
credit decisions, including your FICO score. Lenders look at information
such as the amount of debt you can reasonably handle given your
income, your employment history, and your credit history. Based
on their perception of this information, as well as their specific
underwriting policies, lenders may extend credit to you although
your score is low, or decline your request for credit although
your score is high.
Fallacy: A poor score will haunt me forever.
Fact: Just the opposite is true. A score is
a "snapshot" of your risk at a particular point in time.
It changes as new information is added to your bank and credit
bureau files. Scores change gradually as you change the way you
handle credit. For example, past credit problems impact your score
less as time passes. Lenders request a current score when you
submit a credit application, so they have the most recent information
available. Therefore by taking the time to improve your score,
you can qualify for more favorable interest rates.
Fallacy: Credit scoring is unfair to minorities.
Fact: Scoring considers only credit-related
information. Factors like gender, race, nationality and marital
status are not included. In fact, the Equal Credit Opportunity
Act (ECOA) prohibits lenders from considering this type of information
when issuing credit. Independent research has been done to make
sure that credit scoring is not unfair to minorities or people
with little credit history. Scoring has proven to be an accurate
and consistent measure of repayment for all people who have some
credit history. In other words, at a given score, non-minority
and minority applicants are equally likely to pay as agreed.
Fallacy: Credit scoring infringes on my privacy.
Fact: Credit scoring evaluates the same information
lenders already look at the credit bureau report, credit application
and/or your bank file. A score is simply a numeric summary of
that information. Lenders using scoring sometimes ask for less
information or fewer questions on the application form for example.
Fallacy: My score will drop if I apply for new
credit.
Fact: If it does, it probably won't drop much.
If you apply for several credit cards within a short period of
time, multiple requests for your credit report information (called
inquiries) will appear on your report. Looking for new
credit can equate with higher risk, but most credit scores are
not affected by multiple inquiries from auto or mortgage lenders
within a short period of time. Typically, these are treated as
a single inquiry and will have little impact on the credit score.
There's a lot of information to read through on the Debt Education
website, but we feel this is extremely important material. We
strongly recommend that you bookmark
this page right now. This will allow you to read
at your leisure, and should you need to attend to other matters,
easily return back here at your convenience.
The Debt Education website was built for you. Please explore
our website. You'll find resources and information on virtually
every aspect of financial planning and money management. These
debt delp resources are designed to help you get out of debt
and stay out of debt. You can achieve financial independence.
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Debt Education PO Box 5156, Santa Cruz, CA 95063
