5 Credit score Myths | Full Information
Credit myths fly everywhere. From Facebook posts to blogs, the internet is full of false tips and half-truths when it comes to getting or building your creditworthiness.
Here Are Some 5 Credit Myths You Should Learn Today So That You Can Stay On The Right And Guided Path.
1. Myth: Debt is bad news for your credit score
While your credit score will end up suffering if you miss your loan payments or you have tons of debt, it doesn’t really hurt to be in debt. The truth is that responsible management of different types of debt shows that creditors and lenders have low credit risk for you, which will help improve your creditworthiness in the future. Borrowing is usually a must to buy a home, get a car, and build your credit. This means that you shouldn’t be scared of debt yourself.
2. Myth: You can get an excellent credit score with money buying it
Achieving a good credit score is easier when you have lots of money, but this is in no way a guarantee. High income people can still have bad credit, while those with little money can enjoy big credit. Your income is not the only determining factor. You must learn to live within your means and pay on time at all times.
3. Myth: You only have a single credit score
Today’s credit industry uses various rating models to determine consumer credit scores. Creditors, lenders, and the rest of the third parties don’t use similar formulas and have their own method of weighing the details in your credit report. Things are even more complicated as the information used to calculate your creditworthiness can also vary based on the specific credit bureau providing your report.
This means that, in and of itself, there is no single real credit score. However, the same factors can affect your creditworthiness regardless of the rating model.
4. Myth: Every credit report contains the same information
So you know, there are now three main credit bureaus: TransUnion, Equifax, and Experian. All of these three keep different consumer credit reports. The different versions of your credit report may not contain the same details. There are reports that are more detailed compared to others, and the details can also vary as there are companies that do not report all activity to these three credit bureaus.
5. Myth: You have to close your old credit cards
If you can no longer hold onto your credit card without missing out on payments or using it to the max, then you need to close it immediately to avoid problems. However, if you can no longer use your old credit card, you will be much better off just leaving it open. Your debt load factor and credit score length are the two main factors that can have a serious impact on your credit score. Because of this, both of them benefit from keeping your old credit card at zero.
Now that you have learned the truth about these 5 credit myths, it is important to remember to stay on the right track. If you want to get great credit score, you must read this article. Top 5 Ways To Take Advantage Of Great Credit