Credit Score Myths That Can Actually Do More Damage

Credit Score Myths That Can Actually Do More DamageThere are a number of credit score myths that you might have come across with in your pursuit of better financial management. As you get older, personal finance becomes a lot more complicated and some myths on how you handle your score might come as fact. When this happens, you risk damaging your score and your finances in general.

Once you start blurring the line between myths and fact when it comes to your credit score, problems will start to rear its ugly head. You may not notice it at first and realize it only after you have done the damage to your score. One other possibility is that you will notice that your credit score keeps on dipping but you are unable to pinpoint the reason for it.

These are just some of the reasons why you need to have a clear understanding of these credit score myths. The more you know about them, the better you understand how to discern them. You get to identify the ones that can actually help you from the myths that will further put you down into unmanageable debt.

Here are a few of the myths surrounding credit scores which will only spell trouble for you.

Utility bills are not reported so don’t bother

This is one of those myths that are passed around friends and even in the community. Some may assure you that you do not have to put too much focus on your utility bill payments because they never get reported anyways. If you fall behind, people might even tell you not to worry because it will not affect your credit in any way.

This is one of the credit score myths that you have to be on guard for. Is is because utility bill payments and non-payments can be reported on your score. Some payments are not reported but what you have to remember is what is usually reported. Customers who send in late payments or even accounts that go into the collection are most likely to be reported. This is why you need to make sure that you pay your utility bills on time every time.

Getting married will affect your score

A lot of people might tell you that your credit score will be affected almost immediately once you tie the knot. You might hear people say that marriage will affect your finances. It can combine a lot of things in your life including your credit score. This is untrue because as you get married, your individual scores remain yours and untouched.

There are instances where you might have to apply together as a couple on certain loans. But you cannot just use the higher one for your application. Both of your credit scores will be looked at and considered by lenders. This applies for whatever loan application you have. As you get married, you have to make sure that you still take care of your score individually. This is one of the credit score myths you need to understand.

You should not check your own credit score

It is important to take note that you have to check your own score often. For one, you have to be on top of your finances. More than having a household budget, monitoring your personal credit report is a financial priority. However, people might advise you not to go through with checking your own credit score or report for a number of reasons.

One is that checking your own credit score could entail a big cost on your part. That is true but there are ways to get a copy of your credit report for free. The FCRA gives you the chance to request a free copy of your report once every 12 months. With three major credit reporting bureaus, you can essentially monitor your report every four months.

When it comes to your credit score, you need to understand the difference between a soft and hard pull on your score. One credit score myths you need to be aware of is how a credit pull affects your overall score. A hard pull on your score can negatively affect your score. This is usually done when are applying for a loan and a potential lender wants to see your score. However, if you are checking your own score, you can create a soft pull so your score is not affected.

Do not close any account or your score will go down

You might have heard somewhere that choosing to discontinue accounts will have a negative effect on your score. This has some truth to it but this is not a hard and fast rule. What you need to be concerned about is the history connected to that account. If you are cutting up a credit card and you just started using that card, you don’t have to worry too much about your credit score.

However, if that card you are considering of cutting has been with you for years, you might want to hold off that decision. This is because it has a lot of financial history riding on it. When that goes away, your score can suffer. If you have to let go of accounts, it is best to try and stick to the old ones you have so you can help your score.

A bad credit score will be with you forever

This is one of the credit score myths that can scare you for life but it is actually false. People might tell you that once your score goes down, it will remain there forever. Your score can go down and there will be times when it is not your fault. When your score goes down, there are a lot of ways you can look into to help it go back up.

One is to try and figure out why your credit score is going down. You might want to pull up and check your credit report for any errors you can immediately correct. Another thing you can do is make an effort to make on-time payments if you aren’t sending them out on time. You also need to attend to debt obligations that might already be in collections. Try to look into debt consolidation to help you manage your payments better.

You will not be approved for anything with a bad credit

It is a lot harder to be approved for credit or loan applications with bad credit. However, it does not mean that you will be denied all the time every time. There will be lenders who will still approve provided they are able to put in place some form of measures to ensure they get paid. This is usually in the form of high interest on your loan.

A lot of money will get your credit score up

It is certainly a welcome development when you get the chance to build up your wealth and have more than what you need. However, it is a myth that having a lot of money can help improve your credit score. You can buy a lot of things you want or go on trips and vacations. You can even help out friends and families with their debt problems. Unless you use that money to improve your finances, having a lot of funds will not really help your score.

There are a lot of credit score myths you need to be aware of.  These can guide you when making money decisions. The better you understand them, the easier it would be for you to stay away from habits which will damage your credit.