Fico score ratings are used for most mortgage lending, which means, you need to know what will hurt or help your credit score points. To make it clear, here are some of most common credit score myths.

* Checking your credit report will hurt your credit score

Checking your own credit report and credit score counts as a soft inquiry and does not go against your score. However, if anyone else like a lender or credit card company is checking your credit report, this is considered a hard inquiry and will generally knock off about 5 credit score points.

The credit score rating system treats multiple inquiries in a 14-day period as just one inquiry. The system ignores all inquiries made within 30 days prior to day credit score is computed. So if you want to minimize damage from credit inquiries, shop for a loan in that short period of time.

* Closing old accounts will improve your credit report score

Sometimes even lenders will tell you to close your old and inactive accounts as a way for improving your credit report score. In most cases, closing old accounts will actually have opposite effect with current credit score rating system.

Canceling old credit accounts can actually lower your credit score because it makes your credit history appear shorter. If you want to reduce your levels of available credit, it's better to reduce or close new accounts instead. Applying for new credit is more likely to lower your score.

* You need to check more than just FICO score rating

If  there is still a significant period of time left for payer to make payments, future payments are not worth same amount in current dollars.

Calculations are made to equate all payments into current value, which is how discount is determined.

After purchasing notes at a discounted price, note brokers try to restructure loan and increase its value.

Increasing value of loan requires payer to refinance or increase payments, which requires a new contract.

Factoring same concept of time value of money, we can understand how increasing payments now creates more value. The note can then be sold for a higher price.

Discounts must be taken from loan amount due to inflation and time value of money.

There may still be years left on loan repayment, but payments far in future are not worth same amount in dollars today.

Calculations are made using special formulas to equate future payment amounts into today's prices, making today's price discounted significantly.

On other side of coin, notes that are well seasoned can fetch near remaining balance face value.

***Additional Major Reason Notes Are Discounted***

Although I am a broker myself, I put this site here because I want to bring you a clear understanding (from an insider's perspective) of nuts and bolts mechanics of how secondary market mortgage note industry works.

A major reason many people are turned off from selling their real estate notes is because of discount factor......