Understanding credit scores can be daunting, especially when so much false information goes around.
As a general rule - the higher your credit score, the better. If you're not sure what your credit score is, you can find out with a super quick Equifax credit report. Just bear in mind that different sites use different credit scoring models, so your score might differ depending on which one you use.
In this blog post, we want to debunk some of the most common myths about credit scores so you can make smart, informed decisions about your finances.
False! Checking your own credit report won’t affect your score. This type of check is known as a “soft check” and does not require lenders to review your personal information before approving or denying you a loan. It is also beneficial for people to check their credit reports regularly so they can spot any abnormalities or errors that need correcting.
False! While having a good job with a decent salary may help you pay off debts more quickly and stay within your credit limit, it doesn't always equate to a good credit score. The most important factor when it comes to building a good credit history is whether or not you are able to keep up with debt payments on time and in full.
True! Paying off debt can improve your credit utilization ratio, demonstrating to credit bureaus that you are reliable and trustworthy. When paying off your credit card balance, you still need to stay on top of minimum payments and meet any deadlines on your account. Missed payments like these can stain your credit score for up to seven years - even if you have started to pay off some debt!
False! Each person has their own individual credit report, and each person's report is based solely on their own payment history and current financial situation.
It's possible for couples who own property together or have a joint loan on certain bills (such as mortgages) to have their names linked together in reporting responsibility. However, they still each have an individual actual credit score with separate histories from one another.
False! Closing unused accounts can adversely affect your score as it reduces the amount of available credit that lenders can look at when considering giving out loans - making them more likely to reject applications due to a lack of trustworthiness regarding repayment ability.
As such, it's best to keep old accounts open even if they're not used frequently - make sure they're paid off in full every month, so there isn't any interest piling up. Additionally, closing too many accounts too quickly might raise red flags among creditors. They may reject future loan applications altogether due to suspicion of fraud or money laundering activities taking place without prior knowledge or consent from both parties involved (the borrower and lender).
With so many myths surrounding credit scores floating around, it’s important for everyone to understand the truth behind these misconceptions and take control of their financial future by making informed decisions about managing their money wisely.
Check out our other great content in our Info Hub, with articles about the different types of credit products, money management tips and help with saving money!