Common Credit Questions & Misconceptions

Will paying off an account that has been turned over to a collection agency increase your credit score?

No, most of the time.  Only if the account has recently gone to collections is it wise to pay it off.  If it’s an older account it should be left alone.

Will closing a credit card account increase your credit score?

No.  Closing a credit card could lower your score because the amount of available  revolving credit will decrease.  Keep your balance below 30 % of it’s limit.

Does having cash on hand in a savings account improve your credit score?

No.  Although lenders prefer that borrowers have some cash reserves, credit scoring systems only look at credit.

Is borrowing money from a credit company any different from borrowing from a bank?

Yes.  Credit accounts are not all ranked equally.  Credit from finance company will score lower than a credit card, college loan, or auto loan.

Will seeking help from a qualified consumer credit counselor automatically improve your score?

No. a credit counselor typically negotiates on behalf of the consumer to make lower monthly payments on an overdue account.

Do you need to worry about your credit score only when you are buying a big-ticket item like a house or an automobile?

No.  With the amount of fraud & identity theft, everyone should check their credit report at least once per year.  By law, you are entitled to a free copy yearly, visit

Can negative credit information stay on your record forever?

No.  Negative information only remains on your report for 7 years, but if it involves a bankruptcy it can stay on as long as 10 years.

If you have poor credit and cannot obtain credit what is the best way to start rebuilding your credit?

The best ways to start rebuilding your credit report is by obtaining a secure credit card or asking someone to co-sign on a major credit card.

If you’re thinking about applying for a mortgage or just have questions about your credit I can be reached anytime at 207-590-0337 or