7 Myths About the Credit Score

TODAY

- "Closing out some of my credit cards will reduce my outstanding debt and improve my credit score."
- — WRONG.
- If you pay your credit card(s) bill regularly and on time, you be building a positive credit history. Closing out credit card accounts — particularly if you are late on your other debts or loans or do not have other debts or loans you are paying regularly — may actually negatively impact your score because the credit bureaus will only be collecting information on those (delinquent) accounts.
- "Bad credit scores last seven years."
- — WRONG.
- Fortunately, when you make a change that positively affects your credit scores — like paying off a credit card debt or adding another regular debt payment, the good news is reflected in your credit scores in a very short time, usually within 2–3 months. So, you won't be saddled with a low credit score.
- "My scores from Equifax, Experian and TransUnion will all be the same."
- — WRONG.
- The three main credit-scoring bureaus each calculate their own credit scores. But, they don't receive identical data, so each score will be a little different. It is important to check your credit report from each company regularly.
- "Checking my credit scores will hurt them."
- — WRONG.
- Checking your own scores will not count against you, as it does when potential lenders check your scores. In fact, consumers are encouraged by the FTC to check their credit at least once a year, which they can do for free at Annualcreditreport.com.
- "A higher salary means a higher credit score."
- — WRONG.
- Your score reflects your credit worhiness, based on items that deal only with your debt history only. While salary and job history, along with other economic factors, go into your overall credit report, which lenders review when they review your credit report. A person with any income can develop a solid credit history, and, therefore, a respectable credit score.
- "Using debit cards can help my credit scores."
- — WRONG.
- Don't let a credit card logo fool you — a debit card works like a check. While it may make your life simpler, a debit card is merely another means to pay with cash. Therefore, it will not add another source of information for the credit bureaus to analyze — the way a credit card does to add more detail to your credit history. That said if you tend to live beyond your means, using a — debit card, while not helping you increase your credit score, may help you improve your credit by not overextending yourself.
- "I have to go into debt — get a credit card or take out a loan — to build my credit."
- — WRONG.
- Traditionally, going into debt — either through using a credit card or taking out a loan — has been the fastest way to establish and build credit history. Today, with rent payment services from WilliamPaid, you can build your credit history simply by doing something you need to do every month – pay your rent. It's a new way to think about building credit history — one that could provide much better long-term results than large credit card bills.