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Top Credit Score Myths Debunked
Unfortunately, the way your credit score is calculated isn’t very clear. From this confusion comes misinformation and common myths, sometimes even lending professionals can be found giving consumers bad advice. This can only go downhill, and when it comes to your credit score the wrong advice can cost you a lot of money. What’s necessary then is to debunk these credit myths so that you won’t have to worry about losing your hard earned money, and maybe you’ll even save some money along the way.
This is a common myth that’s widespread today. Many people will tell you that when you check your own credit report it will hurt your score - this just simply isn’t true. When you check your own credit score, it simply counts as a “soft inquiry” and doesn’t hurt your credit score in any way.
It’s not the same for professional lending companies and lenders, however. When a lender or credit card company runs an inquiry on your credit score, this is what’s called a “hard inquiry” and too many hard inquiries can penalize your credit score.
Myth: Closing Your Old and Unused Credit Accounts Will Benefit Your Credit Score
Some unscrupulous or just plain misinformed lending professionals will tell you to shut down any credit accounts that you don’t actively use. While this might seem logical, closing your old credit accounts isn’t the smartest thing to do.
Closing your old credit accounts doesn’t make your account look better, but worse. It will make your credit history seem shorter than it really is, and thus your good credit history won’t be a solid as it actually is.
Myth: Getting the Help of a Credit Counselor Damages Your Credit Score
Being in credit counseling will ultimately help you better manage your credit and financial situation.
While some lenders may shy away from you if you’re in credit counseling, it doesn’t damage your credit score in any way. Research has proven that people benefiting from credit counseling defaulted on their loans at the same rate as everyone else.
Myth: You Have To Check On More Than Just Your Credit Score
While each credit reporting bureau; Experian, Trans Union, and Equifax, have different data, the only number you’ll really ever have to keep track of is your FICO credit score. There are limits to this, however.
It’s a good idea if you check credit reports from the 3 major credit-reporting bureaus mentioned above before you apply for a large loan, like a mortgage for example. You’ll need to find and destroy any errors that you find on these separate reports.
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