Seven Credit Report Myths Busted

There are many factors that you think affecting your credit score but not all of them are true. Following are some of the credit score myths debunked here:

1. Age determines the credit score:

it’s a major myth that your age has an impact on the credit score like younger you are, lesser be your credit score. But its absolutely wrong as there are many factors that affect the credit score, like payment history, credit mix, credit history etc. So its not the age that affect your credit score instead its about how you manage your credits.

2. Checking credit score often will reduce the credit score:

Even if you check your credit frequently, it will not reduce your credit score. Its just an enquiry by the bureau and therefore the frequency of your check shave no impact on your credit score. But checking it way too often will definitely have a bad impact on the credit score.

3. Avoiding debts completely will keep your debt score healthy:

It Is not a good choice to avoid debts completely, rather it has a negative impact. Because creditor while giving a loan will check the credibility of the borrower and his track record in making payments on time or is there any delay etc.

4. Credit problem can be avoided by using only cash:

It is true that if you use only cash and there is no borrowing then your credit score will not be affected and you can buy anything, but this is not the real problem or the problem doesn’t end here. When you don’t have any borrowing, your past record is clear then how will the credit will access your credibility and provide loan. Basically using cash is absolutely fine, but some credit accessibility is much needed.

5. Late payment of utility bill won’t affect your credit score:

Well, it’s a myth that paying utility bills late will not affect your credit score. For instance, if you are not paying electricity bill or telephone bill on time, then it will be reported to the bureaus and sent for collections. So delaying in small bill payment will leave a major mark on your credit score.

6. Closing accounts won’t hurt your credit score:

There is no much harm in closing account which is not in function; well it’s not that easy too. Even if there is no transaction in the account, still it adds to the credit score. So closing an account will definitely affect the credit score and that too negatively.

7. Having a lot of money in bank will improve your credit score:

It’s a myth that if you have million dollars in your bank account then you have great credit score. Credit score has nothing to do with money. Even if with hundreds of million in banks but there is delay in all payments and credit and have very little credit card balance then you are going to have bad credit for sure. Unfortunately lot of money in bank affects nothing on your credit score.

Comments are closed.