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The Six biggest myths about credit score

 

Individuals’ credit score risks are summed up by their credit scores. The United States usually assigns this to three digits ranging from 300 – 850. The lower the number, the lower the risk. These scores are generated primarily by Experian and TransUnion. As digital financial transactions rise in popularity, people must take more precautionary measures to keep their personal information safe to avoid issues with identity theft or fraud. You will be in a better position to make wise financial decisions and land jobs requiring background checks or security clearance screenings if you know what your credit means.

 

Factors lowering my credit score are myths #1: Running my credit will hurt my credit score

In addition to your credit history, your credit report is used to calculate your score. The score will decrease if you have opened a new account or taken out a new loan. We can help you improve your credit and help you throughout your financial career.

 

Myth #2: My credit is my only score

It is common for people to be unaware they have more than one credit. Analyzing your financial situation requires knowledge of your credit. A FICO score ranges from 300 to 850, for example. You’ll be at a higher risk of borrowing money or even renting an apartment if your FICO score is low since lenders will be concerned about whether you can pay them back on time.

 

Myth #3: We will have the same credit score after we marry

Couples merging their finances and merging their credit scores after marriage are common. The most common question we hear from consumers is whether their scores will remain separate when they merge with their spouses. If you work separately on building up good credit, it might make sense to opt for a combined score rather than keeping your separately acquired one. 

In addition to the benefits of raising each other’s credit limits. Reducing interest rates through some lenders that are only available by combining them into one account. Couples might also do this in order to qualify for certain loans, mortgages, and other financial products.

#4: Getting a personal loan will damage my credit rating

My credit will be damaged if I get a personal loan. This is due to a number of reasons:

 

Lenders calculate the amount of money they can lend you based on your debt-to-income ratio. The amount of money coming in can be a good indicator of whether the debt can be repaid. Additionally, you hurt your credit score since most creditors report payments and balances monthly to the three major national credit bureaus. Every time you miss a payment, it may drop your credit score by 5 points up to 100 points for very late payments over 60 days past due (depending on state law). It is also possible that your interest rate will increase as a result.

 

Myth #5: Closing a credit card will help me

You can improve your credit score by closing a credit card account. A typical person will typically have between 3 and 5 open accounts with varying balances and payments at any given time. If you close one, you will be able to pay less than 30% of your credit limit overall if you close all your accounts.

Myth #6: I’ll be able to get a better credit score by using a debit card

The importance of credit in society today cannot be overstated. A good credit score will enable you to get a better interest rate on your auto and home loans, and can even reduce your insurance rates. Is that the case when using a debit card? Could I hurt my credit score if I do it?

Using a debit card rather than cash reduces your chances of having high debt or an outstanding balance, according to a common misconception. There is no way that this is true! Instead of spending cash, you can use your debit card to make purchases, which will give you instant gratification without actually spending any money – and this could hurt your credit score.

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