While establishing a good credit score is a vital piece of your financial picture, there are many common misconceptions about what affects it. Telling facts from myth is crucial, as consumers strive to do what they can to improve their credit scores.
Here is the truth behind 4 common credit score myths that people still believe today.
A good credit score means you’re rich
Is it easier to pay your accounts when you’re rich? Of course, it is. Does being rich automatically mean that you can or will pay your accounts on time? No, it does not. Being rich means that you have the resources to cover your expenses, but it doesn’t mean you have the discipline or desire to pay your accounts on time. each month.
The things that many people believe will help or hurt their scores don’t help or hurt them.
Checking my credit score lowers my credit score
Checking your score helps you track your credit status, but it is important to check it the right way. Every time your credit report is checked, it results in an inquiry. But there are two kinds of inquiries you need to know about: hard and soft.
Checking your own credit report is considered a soft inquiry and will not affect your credit score. These types of inquiries do not appear to credit providers and do not affect your credit score.
Checking your own credit report is considered a soft inquiry and will not affect your credit score. These types of inquiries do not appear to credit providers and do not affect your credit score. When you apply for a credit card or loan, a credit provider will pull your credit report, and a hard inquiry will be placed in your credit profile. These inquiries are available to other credit providers when they review your credit report. Rack up too many hard inquiries, and it can have a negative effect on your credit score. It can be interpreted that you are either having trouble getting new credit or overextending yourself with your financial responsibilities. So, it’s a good idea to keep your hard inquiries to a minimum and only when necessary.
My income impacts my credit score
The size of your paycheck isn’t displayed on your credit report, and wealth metrics aren’t considered by credit scoring models. Income can impact your credit score when you have no income, resulting in late or no payments on your accounts. While it’s good to know that the size of your paycheck has no influence on whether you have good or bad credit, you should know what does impact your score.
Once a credit score is bad, it can never be rebuilt
Your credit score CAN be rebuilt over time. Some negative information will stay on your credit profile for a few years, but as the negative information ages, it impacts your credit score. You can improve your credit score before the negative accounts fall off if you make payments on time and keep a reasonable level of debt.
Taking the mystery out of how scores work can help you boost your rating.