Your credit score has a major impact on your financial life. That said, not everyone fully understands how they work, due to which there are some misconceptions and myths about credit scores.
These myths can negatively impact your score, so we’ve debunked some of the most common credit card myths here:
- Checking your credit score can hurt it: Checking your credit score will not hurt it, provided you use credit scoring services. It’s a good idea to check your credit score every few months so you can track any changes to the score.
- Having a good income improves your credit score: Your income has no impact on your credit score. However, a high income may improve your bill payment habits, which can positively impact your credit score.
- Each person has a single credit score: It is possible to have several different credit scores because there are many credit scoring models. Also, each of the three major credit bureaus may have different credit scores.
- Not having a credit history is a good thing: Having no credit history at all is not a good thing. If you don’t have a credit history, creditors won’t be able to determine your creditworthiness and may reject your application. So, if you don’t have a credit history yet, consider getting a secured credit card to build a credit history.
- Debit cards affect credit scores: Debit cards essentially work exactly like cash. So, your debit card transactions do not affect your credit score. The primary financial products that affect credit scores are loans and credit cards.
- Closing a credit card improves your score: Closing a credit card, especially if it is unused, can increase your credit utilization, which will, in turn, lower your credit score. So, it’s a good idea to avoid closing credit card accounts.
- There’s no way around a bad credit score: There are many things you can do to improve your credit score if your score isn’t great. For starters, you can make your bill payments on time, keeping your credit utilization low, and increasing your credit limit, among other things.
Make it a habit to go through your credit report from time to time to stay on top of your credit.