There Are Many Credit Score Myths Floating Around

Category: Finance, Credit.

There are many credit score myths floating around. Here are a few credit score myths: Credit card offers will lower your credit score.

This is due to the fact that few people know how credit scores are calculated and what helps determine a credit score. Receiving credit card offers does not lower your score. The higher the balances on your cards, the lower your credit score, and if you do not repay the minimum every month, you will significantly hurt your credit history. If you choose to open multiple lines of credit, you leave yourself, however at risk to spend more, and this can lower your score. Checking your score hurts your credit. Many people think that checking your credit report can lower your credit score.

This is a tricky one. This is not necessarily the case. However, such as applying, hard hits for new lines of credit, will lower your score. You can check your credit score as many times as you wish without lowering your score, as long as you do so through legitimate credit reporting agencies. Comparing mortgage or car loans can lower your score. In fact, inquiries for a mortgage or car loan are treated as a single inquiry as long as they occur within 45 days of each other, so feel free to look for the best deal.

For the same reasons as above, many think that shopping around for the best mortgage or car loan rates can lower your score. Paying off all my debt will raise my score significantly. Your credit score is also determined by your credit history. While this may seem like a logical conclusion, your credit score is not based solely on how much debt you have. If you constantly made late payments or missed payments altogether, your credit score will remain low, as this tells companies that you may not be able to pay in the future. The FICO model does not take into account any references to credit counseling. Credit counseling will hurt your credit score.

This changed 3 years ago, after research showed that those who underwent credit counseling did not default on their debts more than anyone else. Overall, be careful about what you believe when it comes to your credit. However, some companies see the reference to credit counseling and will not offer you credit, while others may offer you a higher interest rate. By obtaining credit counseling or speaking to a professor, you can help learn fact from fiction and choose the best course of action to build good credit.

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