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smartCredit Savvy Key to Avoiding Costly Missteps

There's a lot of misinformation floating around about how to shop for, use, and benefit from credit.

For example, many consumers believe that a "credit repair" operation can improve their credit score for a fee. In reality, there's no quick fix for a low credit score. It is possible to improve your credit score by correcting inaccuracies in your report, but this is something you can do yourself, free.

Another common myth is that closing old, unused credit accounts will improve your credit score. It may seem illogical, but closing old accounts actually can hurt your score because closing older accounts makes your credit history shorter. That's because the credit scoring formula rewards consumers for having a longer, well-established credit history. Also, closing an account with little or no balance makes your outstanding debt greater in proportion to your available credit, and that typically lowers your score.

Think the interest rate on your fixed-rate credit card can't be raised? Think again. A card issuer can change the interest rate and many other terms of your agreement with just 15 days' written notice. That's especially important to know if you're carrying a huge balance and would experience a significant increase in the monthly payment with a higher rate, says Linda Sherry, spokesperson for Consumer Action, a nonprofit education and advocacy organization in San Francisco.

These are just a few of the many commonly held misconceptions about credit. Consumers who are able to separate fact from fiction can avoid costly mistakes.

If you have questions about credit or are looking to switch to a credit card with better rates and lower fees, contact an MSO.


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