Financial Debt Settlement - Facts and Myths About Debt Related Issues

Getting rid of debt is one of the hottest topics of discussion in
America after the turmoil brought on by the economic recession and its
impact on the common man. There are numerous articles on the internet
other media talking about debt, its causes and consequences, the
alternatives available to eliminate your debt and many related issues.
The overload of information can end up confusing the consumers rather
than helping them to resolve their problems. This article aims at
dispelling a few of the common myths about debt issues and tries to
bring clarity on the actual facts pertaining to the issues.Myth -
Repaying your debt can instantly boost your credit scores.
Fact -
Your credit report is not a statement that shows your credit status at
that particular moment in time. It is a history of all payments that
you make over a certain period of time. Therefore, just because you do
not currently have any debt to be paid off to creditors does not
negate the fact that you did owe a substantial amount for several
years and this will definitely impact your credit rating. However,
while you may not have a glowing credit report, repaying your debt is
the only way to ensure that you will get good credit at any point in
the future (even if it is after a 5-6 years).Myth - Checking your FICO
score can negatively impact your credit
Fact - Ordering for a copy of
your credit report to check your FICO score has absolutely no impact
on your credit rating. However, when your creditors check out your
credit rating based on your payment default, it can have an effect on
your credit score.Myth - Surrendering your credit cards and closing
the accounts will improve your credit score
Fact - It is best to not
have too many credit cards to play with. However, if you already own a
lot of credit cards, closing them out can be detrimental to your
credit rating. Credit score calculations take into consideration the
difference between your available credit and the amount of credit
being used up. Therefore, when you close out credit accounts, the
total credit balance available will decrease which will make your
debts look disproportionately large and in turn impact the credit
score.