Arizona Mortgage Guru » Top Five Credit Misconceptions

The East Vally Tribune published a very informative article yesterday on the top five credit (and debt) misconceptions. According to the EVT (citing Transunion), the top five credit misconceptions are:

Co-signing a loan doesn’t make you responsible for the account.
Paying off a negative record will get it removed from your credit report.
Paying off a debt will make your credit score jump 50 points right away.
Checking your credit reports will lower your credit score.
Closing old accounts will improve your credit score.

The co-signing part is the most controversial of the five becuase it oftentimes involves people you love and know. I talk to so many people who have co-signed for their brother, sister, son, daughter and sometimes friends. I know a level of compassion determines who you will co-sign for, but you need to be prudent.

I suggest you do a type of credit check on your own. If the relative asking you to co-sign has had some serious money management problems in the past then you may want to stay away. However, if this is a one time situation where the person is in a jam, then you can consider doing something. This doesn’t mean there aren’t other ways of helping them besides co-signing. I suggest looking into other avenues. It’s good to help, but you must be prudent.

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Categories: Credit Scores, Debt, Personal Finance

4 Responses to “Top Five Credit Misconceptions”

Jack Jones wrote a comment on October 5, 2007, 4:31, pm

Here’s a couple you missed.
6. There is no “good” debt - its all slavery, why battle over shades of gray?
7. The credit card companies and banks are your friends - wrong they are your enemies!! It’s their job to take as much of your money now and in the future forever. It’s you job to resist and keep your money for yourself
8.You have to live like a millionaire to be a millionaire - Wrong - most millionaires drive old cars, wear old clothes and have wads of new money - try it. A paid for car is like an instant raise,
9. The economy is great and getting better every day - Wrong the government and media (I’m being redundant - they are one and the same) job is to make you think everything is rosy, while business steals your future money thru treacherous loans and the government steals your current wages thru taxes, taxes and more taxes.
10. The government is looking out for you - Wrong - they are trying to make sure you don’t have a clue so they can do whatever they want, including steal your money, take your house and impound your savings, though paltry they may be!! Why? Because they are the government and you are not. Economic tip #10, cut down government before it cuts you down!!!

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