p { margin-bottom: 0.21cm; } There are loads of misinformation regarding what affects and does not affect credit score. However, it is important to have a proper understanding about credit score as many things ride upon this. So, you should have a clear understanding about the myths surrounding credit score.
In the present economic situation, a decent credit is extremely important for your financial health. This is because you’ll not be able to qualify for a mortgage, credit card, or any type of a loan at a favorable interest rate with a bad credit . Newspapers, financial websites are flooded with interesting tips to improve credit. Unfortunately, not all the tips are good and there are lots of misconceptions surrounding credit score. Read on to know about 6 common credit score myths that may hamper your financial health.
Credit score myths
Here are some common misconceptions about credit score that you should be aware of:
Myth#1: You must not use credit cards at all
A lot of consumers with bad credit stop using their credit cards thinking that it help to improve their score. However, this may have a negative impact on your credit score. Credit score shows how responsibly you use your credit. When you don’t use credit cards at all, it means that you’re not building credit history. This makes a negative impact on your credit score. Therefore, the financial experts recommend consumers to use credit cards responsibly.
Myth#2: Ordering your credit report will hurt your score
You can order your credit report or check your score as many times you wish. This will not hurt your credit score at all. However, it is advisable to check your credit reports and scores through bureaus or authorized websites.
Myth#3: Closing accounts will increase your credit score
This is a wrong concept. Closing multiple accounts will not increase your credit score. To the contrary, it may hurt your credit score. Credit history accounts for 15% of your score. When you close multiple accounts, your credit history may seem shorter. Thereby your credit score may drop.
Myth#4: There is only one credit score
The actual fact is you have 3 credit scores from 3 credit bureaus namely Experian, Trans Union, and Equifax. You should know that these scores can vary by as much as 50 points or even more. Hence, it is always better to check your credit score from the 3 bureaus.
Myth#5: Your earnings, gender, and age affect your credit score
According to a renowned financial expert, your age, gender or earnings does not affect your credit score. It is true that your employment is shown on your credit report, but it does not hurt or improve your score.
Myth#6: Credit counseling hurts your credit score
It is entirely a myth. A lot of people assume that credit counseling affects one’s credit score. But the fact is, credit counseling don’t factor into credit scoring system nowadays. There is no doubt that it will be reported on your credit report that you are getting counseling, but it won’t have a negative impact on your score.
Finally, several people think that once they get married, their credit scores are merged. But the fact is your credit score remains yours till your death. However, if you and your spouse open accounts jointly, the information will be reported on both of your credit reports.
Credit mysteries uncovered – Know what brings your score down
Credit score affects your life in a big way. You should know about the financial blunders which can hurt your credit score, so that you can avoid performing them.
Negative details can be deleted from credit report – Myth or fact?
Consumers often wonder as to whether the negative items can be eliminated from their credit reports. If the information is accurate, then the items are less likely to be removed from the credit report.
How can I improve my credit score?
There is no shortcut to increase your credit score overnight. But, by paying down the major chunk of the debt you owe or paying down the entire debt amount at a single go, considerably improves your credit score.
