10 Common Myths About Credit Scores Debunked
by priyanka roshan | aug 2, 2024
MYTH: Checking Your Own Credit Score Lowers It
FACT: Checking your own credit score is a "soft inquiry" and does not impact your score. Regular monitoring helps you catch errors and fraud.
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MYTH: Carrying a Balance on Your Credit Card Boosts Your Credit Score
FACT: Carrying a balance does not boost your score and can increase your credit utilization ratio, potentially lowering your score.
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MYTH: A Perfect Credit Score Is Essential
FACT: While a high credit score is beneficial, perfection isn’t necessary. A good credit score is often sufficient for most financial needs.
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MYTH: Closing Old Credit Accounts Improves Your Score
FACT: Closing old accounts can hurt your score. A longer credit history often positively affects your score.
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MYTH: Only Loans Affect Your Credit Score
FACT: Both loans and credit cards impact your score. Responsible management of credit cards, including timely payments and low balances, is crucial.
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MYTH: Paying Off Debt Immediately Will Fix Your Credit Score
FACT: Paying off debt is important, but it doesn't guarantee an immediate score boost. Changes take time to reflect, and credit utilization is key.
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MYTH: Your Credit Score Is the Same Across All Agencies
FACT: Credit scores can vary among agencies due to differences in the information and scoring models used.
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MYTH: A Higher Income Equals a Higher Credit Score
FACT: Income does not directly affect your credit score. Scores are based on credit history, payment behavior, and utilization, not income.
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MYTH: If You’re Denied Credit, Your Credit Score Will Drop
FACT: A credit denial itself doesn’t affect your score. However, a hard inquiry made during the application process may cause a slight, temporary dip.
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MYTH: Approaching Your Credit Limit Will Not Affect Your Credit Score
FACT: Using a significant portion of your credit limit can negatively impact your score by increasing your credit utilization ratio.
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