Today, you’ll find information about credit score everywhere, but still customers have many misconceptions when it comes to increasing their scores. These misconceptions can be downright harmful. In this article, we are going to show you 6 credit score myths with the truth behind them.
This is, unfortunately, one of the biggest misconceptions. People think that a bad credit score will last forever, in which case you’ll always have problems getting loans and credit cards. The truth is a bad credit score only lasts forever if you continue to make many harmful choices, including maxing out your credit cards, making late payments, and letting loans or bills reach collections. If you manage your credit well, you’ll see the credit score improving. Most negative information remains on your credit report for seven years. After that, they fall away. The score can be seen to improve even before than if there is positive credit account information.
You’ll be surprised to know how soon it can happen. It just takes a few months, and when this happens, your credit score can be ruined for years. If your loans are due for 6 months, your loan account will be charged off and perhaps given over to collections. This is the worst thing that can happen for your credit score. The worst thing is multiple write-offs or loans sent to collections.
This is not true. You can check as much as you want, provided you check or use a credit score service, and are not checking through mortgage lenders.
Again, this is not true. Your credit score is not directly influenced by your bank account balance or your income. The score is affected indirectly by how much money you have. Income, therefore, is not a factor. However, timely bill payments do affect your credit score. Thus, regardless of how much money you are making, paying bills on time is good for your credit score.
The truth is that each person has more than one credit score. Typically, one has several credit scores since there are several credit scoring models. For each of these models, there are 3 different credit scores for each credit bureau.
Your credit score which you see online, whether you purchase it or get it for free, is just an educational credit score and is not the real one which your lender will be seeing. Educational credit scores may give you a general ideal of how healthy the score is, don’t take financial decisions based on that.
These are the major credit scores myths which still abound. We home we have busted these myths for you.