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Test your knowledge of credit scores

HOUSING SCENE

Many people, including lenders, don't understand how their actions affect their scores, which determine whether they can get a loan and what interest rate they'll be charged.

April 11, 2010|By Lew Sichelman

8. False. Finance company cards, which typically allow borrowers to open a store account with zero interest for a year, weigh more heavily on credit scores. Worse, when you open the account the creditor sets your limit at the cost of your purchase, meaning the card is maxed out and well above the 30% balance you should strive not to exceed.

9. False. Generally, negative information remains on your report for seven years from the last activity. But if it involves a bankruptcy, it can stay for as long as 10 years. 10. False. Always use the same, full legal name. Being consistent will help avoid confusion with other borrowers with the same name as yours. Not all credit bureaus use Social Security numbers as the primary means of identification.

11. True. One reason for a low score is there is not enough "positive" revolving credit in your report. In many cases, when "positive" credit is added, a score will increase.

You can do that by obtaining a secured credit card, which requires you to put up the money first and then lets you borrow against the balance. Another option is to ask someone with an established credit history to act as a cosigner on an account with you.

Also, consider asking someone to add you as an authorized user so that his or her history on the account will be added to your credit file. However, because this practice has been abused, Experian, one of the three major credit bureaus, no longer reports "authorized user trade" on its consumer credit reports.

lsichelman@aol.com

Distributed by United Feature Syndicate.

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