Your credit score is complex, but understanding more about how it works allows you to improve your credit report. Take note of these six common money myths so you can increase your credit score – and avoid hurting it.
Myth No. 1: It is impossible to improve your credit score.
The truth: You can rebuild your credit over time with patience and good debt management. As you make spot payments, lenders will notice fewer negative marks on your credit history. You’re suggested to consult how to improve your score with legitimate credit repair companies.
Myth No. 2: Verifying your credit can damage your credit score.
The truth: Taking out your own credit report, also known as “soft consultation”, does not affect your credit score. In fact, reviewing your credit report regularly is a responsible financial practice. By law, you are entitled to a free report from each of the three reporting agencies every 12 months. Keep in mind that if a lender gets your score to approve a new line of credit, it is a “deeper investigation” and can reduce your credit score. In general, you must authorize this procedure. For your info, reputable credit repair companies can authorize the procedure.
Myth No. 3: Closing old accounts can increase your credit score.
The truth: Closing an account reduces your available credit – which can raise your credit debt ratio and therefore decrease your score, especially if you have balances on other cards.
Myth No. 4: Closing old accounts can shorten your credit history.
The truth: Accounts without negative marks that are paid in full will remain on your report for 10 years after they are closed.
Myth No. 5: Signing as a guarantee for a loan or credit card will not affect your credit score.
The truth: You are equally responsible if the borrower is overpaid or exceeds your limit – and your credit score will be penalized. But…dealing with fast credit repair companies can minimize the risk.
Myth No. 6: Paying in cash is the best thing you can do for your credit score.
The truth: A good credit score means a solid credit history, which can not be built or kept paying for everything in cash.