Credit Score Myths You Should NOT Fall For

When it comes to credit scores, conventional wisdom is full of misconceptions, myths, and misrepresentations. Like any other tool, your credit score will only improve if you know how to use it the right way.

Myth 1 – All Debts Are Not Equal

While running up debts because you went on a shopping binge and partied the night away will probably haunt you for years to come, incurring debt for a mortgage or student loan can show you in an entirely different light.

Myth 2 – Closing Your Credit Card Will Improve Your Score

You’re unlikely to improve your score by closing an unused card. In fact, it might even hurt your score. In general, credit scoring models consider how much of the credit available to you is being used. So if you close your credit card, you may be increasing your credit utilization. But in the long-term, an unused credit card can be a huge temptation, and you might be better off getting rid of it.

Myth 3 – Checking Your Report Will Lower Your Score

If you apply for a loan or a credit card, your score might fall because the lender does a hard inquiry of your credit history. But, if you check your own credit report, your credit score will not drop.

Myth 4 – There Is only One Credit Score

This is one of the biggest myths of all. In reality, many scoring models are used in the credit marketplace every day. So, a consumer could have different credit scores. When someone checks out your credit score, they may use a different formula depending on the factors that apply to the reason they are looking up your score.

Myth 5 – A Better Job Automatically Means a Better Score

It’s tempting to believe that this is true. However, you should know that your job title and income don’t affect your credit score directly. Your score is only based on the information in your credit report, which includes how you use your credit card and how you manage your debt. The only way your job is relevant to your debt is when it signifies your ability to pay your debt on time.