We all know that having a good credit score is important in today's world. Perhaps you need a new car and a loan. Or, perhaps you want to rent an apartment. The prospective landlord wants to check your credit score. These days, even if you want to book an airline ticket, buy a book online or apply for a job, you will need a credit card and, for that, you will need a good credit score.
Many people, though, avoid checking their credit for fear of what they might find. They believe, sometimes justifiably, but often not, that their score must be bad because their income is low or
because a few years ago they suffered a bankruptcy or forgot to pay the electric bill. Are any of these reasons sufficient to lower your credit score? What are some of the top erroneous things that people believe about their credit score?
Myth #1--Paying cash will give me a great score. Well, no. After all, the credit card bureaus report information from creditors. If you pay cash, you have no creditors and, therefore, no score. Plenty of people actually have no score either because they are too young or because they always pay cash.
Myth #2--Low income makes my credit score low. That's not true either. Income is not reported to credit bureaus, ever. Your income is reported to the IRS and you may report your income if you are applying for a credit card or a mortgage, but that information is not passed on to the credit reporting bureaus.
Myth #3--Closing my accounts will raise my score. As a matter of fact, closing an account, even an inactive one, may lower your score. Part of the credit score includes what percentage of available credit [http://www.help-to-fix-my-credit.com/free-credit-report] you are using. If you close an account with available credit, then the percentage of use goes up. Close accounts only when you are very sure you have at least 50-60% of all your
credit available, never when you are maxed out.
Myth #4--Since I've done a short sale, had a foreclosure or undergone a bankruptcy, I won't be getting any. credit for 7 or 10 years. Nope, that's not true either. As a matter of fact, any of these events may eventually improve your score as the bad or unpaid mortgage and bills recedes into the distance. As long as you pay your bills after these events, you credit score will improve steadily, allowing you to get credit again in as little as a year or two.
Myth #5--Paying my credit cards in full every month will give me a perfect score. That's partially true as a record of paying your bills on time is one part of your credit score, but it's only one part. Other parts include the length of time you've had credit, how you've managed your credit in the past and what kinds of credit you have. All department store or gas cards, for instance, is not going to build a great credit score.
Krystal Kidd writes on various topics, including outfitting a baby nursery [http://www.babybabyboutique.com/baby-bedding] and credit scores [http://www.help-to-fix-my-credit.com/free-credit-report].
Many people, though, avoid checking their credit for fear of what they might find. They believe, sometimes justifiably, but often not, that their score must be bad because their income is low or
because a few years ago they suffered a bankruptcy or forgot to pay the electric bill. Are any of these reasons sufficient to lower your credit score? What are some of the top erroneous things that people believe about their credit score?
Myth #1--Paying cash will give me a great score. Well, no. After all, the credit card bureaus report information from creditors. If you pay cash, you have no creditors and, therefore, no score. Plenty of people actually have no score either because they are too young or because they always pay cash.
Myth #2--Low income makes my credit score low. That's not true either. Income is not reported to credit bureaus, ever. Your income is reported to the IRS and you may report your income if you are applying for a credit card or a mortgage, but that information is not passed on to the credit reporting bureaus.
Myth #3--Closing my accounts will raise my score. As a matter of fact, closing an account, even an inactive one, may lower your score. Part of the credit score includes what percentage of available credit [http://www.help-to-fix-my-credit.com/free-credit-report] you are using. If you close an account with available credit, then the percentage of use goes up. Close accounts only when you are very sure you have at least 50-60% of all your
credit available, never when you are maxed out.
Myth #4--Since I've done a short sale, had a foreclosure or undergone a bankruptcy, I won't be getting any. credit for 7 or 10 years. Nope, that's not true either. As a matter of fact, any of these events may eventually improve your score as the bad or unpaid mortgage and bills recedes into the distance. As long as you pay your bills after these events, you credit score will improve steadily, allowing you to get credit again in as little as a year or two.
Myth #5--Paying my credit cards in full every month will give me a perfect score. That's partially true as a record of paying your bills on time is one part of your credit score, but it's only one part. Other parts include the length of time you've had credit, how you've managed your credit in the past and what kinds of credit you have. All department store or gas cards, for instance, is not going to build a great credit score.
Krystal Kidd writes on various topics, including outfitting a baby nursery [http://www.babybabyboutique.com/baby-bedding] and credit scores [http://www.help-to-fix-my-credit.com/free-credit-report].
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