Avoid Believing in These Credit Score Myths

Although there is a lot of information available on the internet about credit scores, many consumers still hold misconceptions about them. Here are some such myths and the truth about them:

Every Person Has only One Credit Score

Every person has multiple credit scores as there are various credit scoring models. There are three different scores for each model, made by each of the major credit bureaus.

Employers Check Credit Scores

It is illegal for employers to check an applicant’s credit score during the screening process. The media often gets this fact wrong, mostly because people don’t get the difference between credit reports and credit scores. Employers can review applicants’ credit reports, but not credit scores.

You Need to Check Your Score only If You’re Going to Apply for A Loan

Every consumer should check their credit score and credit reports regularly to stay updated about their financial health. Monitoring your score helps you confirm if you’re handling your credit properly.

Checking Your Score Damages It

Using a credit scoring service to check your score doesn’t hurt it, checking it with mortgage lenders does. Credit scoring services let you get your score calculated as many times as you want.

A Bad Credit Score Never Goes Away

A bad credit score will last forever only if you indulge in habits that damage your score, including maxing out your credit cards, paying late, letting bills go into collections, and the like. If you start moving away from such unhealthy habits, your score will improve over time.

Getting Married Means a Merging of Two Scores

Even after your spouse and you get married, both of you will continue to have separate credit scores and credit histories. Joint accounts affect the scores of both account holders, but individually-held accounts only impact the respective account holder’s score.

Canceling a Credit Card Will Boost Your Credit Score

Closing a credit card may damage your credit score instead of improving it, more so if you cancel the card with a balance. Having accounts, especially those in good-standing, usually helps your credit score.

Debit or Prepaid Cards Improve Your Credit Score

Your history with debit or prepaid cards is not taken into account while calculating your credit score as there is no credit aspect to these cards. Loans and credit cards are the primary financial products that affect credit scores.