Your credit is the financial reputation that you carry with you throughout your adult life. Having good credit can be the determine what you drive, where you live, and sometimes where you work. Bad credit will cost you money as well whether it be through higher interest rates, not being able to qualify for a mortgage and having to pay a high rent, or generally not getting approved for credit and having to make all cash purchases. There are many myths about Credit and how to maintain and perfect it, but there are also alot of misconceptions. Here are the 5 Biggest credit score myths.

1. Checking your credit score will cause it to drop

Checking your own score wont cause this because it is a soft inquiry. Only a hard inquiry (seeking new credit) will cause it to drop momentarily. There are several free services that give you a ball park credit score figure, but the most accurate report will come from

2. You have only one credit report and score

While your score is usually consolidated into one, you do have three scores. Transunion, Equifax, and Experian are the three credit bureaus and while the scores may vary, they’re usually in the same vicinity. A FICO or vantage is usually an average and many times the score used to make credit decisions.

3. You need to carry a balance and pay interest to build credit

Some people believe you need to carry a balance to show lenders you’re using credit, but doing so could result in you paying unnecessary interest and could hurt your credit score by increasing your credit utilization rate. Credit utilization is the amount of available credit you use in relation to your credit limits, and it’s recommended that you keep this below 30 percent, preferable 10%.

4. Closing old accounts will help your score.

Closing an account actually hurts you in two ways. Lenders like to see a long credit history, and closing a account shortens that. The second reason is it reduces the overall amount of credit you have available which increases your debt. Its wise to keep the older accounts open and not use them rather than just close them.

5. People who make more money have better credit

Your income and personal wealth have nothing to do with your credit score. Your score is all about how you manage your debts, regardless of how big or small. The only way a bank account can affect your score is if you bounce checks and the balance owed gets turned over to a collection agency.

I hope this clears some of the credit confusion up for you, and helps you manage and achieve a better score for you.





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