Five Myths about Credit Reports
Credit reports can be overwhelming and may be ignored if you are unsure which habits are good or bad. There are myths that are associated with credit that are actually false.
Closing Credit Cards Will Improve My Score
Some think that just because you paid off an account that it should be closed, but this will actually hurt you as it decreases your total available credit. The best thing you can do is cut up the card, never use, and keep the account open, proving you do not spend your max capacity.
Opening a New Credit Account Will Kill My Credit Score
If you are opening many accounts, yes they will lower your score a few times for each lender that is reviewing your credit account, but if you are being responsible, the short-term score dropping a few points will actually help in the long run as your credit availability will increase as will your score.
Too Many Credit Checks Will Lower My Score
As long as you are checking your own credit your score will not be impacted, as these are called “soft pulls”. Having lenders check your credit while taking an application for a home, auto, or credit card purpose will lower your score a few points each time, so make sure that if you are getting approved for something, you will go through with it, and do not open up too many credit accounts. Though it is possible to learn how to remove credit inquiries from lowering your score.
My Income or Bank Account Impacts My Score
Although your employment history may be reported on your credit report, typically your salary will not, and for sure will not impact your credit score, as well as the amount of money in the bank. Credit scores factor in payment history, debt, and inquiries, so there is no need to worry, at least about the income and asset piece.
Bad Credit is here for Good
Well although it may seem like forever until your score goes from “poor” to “excellent”, bad credit is not forever. Sure it may take years to improve your score, but with responsible payment history, removing debt, and not living beyond your means, you will see your score steadily rise quickly. Late payments significantly lower scores so any days of being over 30 days late need to be gone, and watch your credit balance versus your availability because scores factor in your spending reaching its max.