There are a lot of myths surrounding your credit score that you might not even realize are false. A lot of people like to believe they are experts on credit, and this means a lot of false information gets spread around, especially on the internet. It’s up to you to educate yourself about the importance of maintaining good credit and how to actually improve your score. Being aware of what’s true and what’s just plain false is the first step to understanding how your credit score really works. Here are the top myths about your credit score!
Checking your credit score will hurt your score
This is one of the biggest misconceptions about credit scores, and it’s what leaves a lot of people afraid to inquire about their own score. When it comes to checking your actual credit score, there are two main types of inquiries. The first is a hard credit check. These are done by big financial institutions, and they will knock your score down a few points. If you’re trying to get approved for something big, like an apartment or a credit card, this kind of assessment will in fact lower your score a bit.
The other kind of credit check is a soft inquiry which is done when you look for your own score or as part of a background screening process. These types of checks don’t hurt your score. You have no reason not to utilize free credit report and score services as you deem necessary.
The best way to build credit is by using credit cards
While responsible credit card usage can have a positive effect on your credit score, it’s not necessarily the best way to build a great credit score. If you misuse your credit card, you run the risk of dropping your score significantly which can make credit cards a less appealing option to rely in total. The best way to build your credit is by having diverse forms of credit on your overall report, like a mortgage or a car loan in addition to a credit card.
If you don’t already have credit, it’s impossible to get
A lot of new credit builders struggle with the belief that it’s impossible to build credit from scratch. While it’s true it can be challenging to get a credit card or other loan without any credit history, there are still a number of options available. First, a cosigner with a solid credit score can usually help mediate the risk of a new credit user. Similarly, there are many introductory credit cards that cater to new credit users by requiring a refundable deposit.
Once I pay my delinquent bill, it’ll be removed from my credit score
Unfortunately, once a payment is in delinquency, it’s not easy to remove from a credit score. That’s why it’s so important to work with the institution to find a way to avoid the lack of payment being reported on your credit report. If a bill goes into collections, for instance, it can take up to seven years to be removed from your credit report, even if the debt is paid in full. The best thing you can do if you’re facing collections for a bill is to negotiate a reasonable payment plan with the collections agency or institution.
Maintaining a good credit score doesn’t have to be hard
A lot of new credit users find themselves afraid of credit. The thought of a “good” and “bad” score can make utilizing credit a daunting thing. Luckily, it’s easier than ever to learn about your own credit score. There are a lot of options if you’re facing a low credit score, and a little bit of financial management can go a long way. The first step to a great credit score is simply understanding how credit works. Make sure you aren’t fooled by any of the myths on this list!
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