There is a lot of noise out there about what is true and what’s not when it comes to a credit score. Today, we will talk over some misconceptions and tell you where to learn more about everything credit-related.
Here are the most common credit myths that many people still accept as true.
Your Job Impacts your Credit Score
Where you work and how much money you make has nothing to do with your credit score.
You can be the CEO of a multi-billion-dollar company and still have a creepy credit. Likewise, you could be earning $7 an hour at the grocery store and have a perfect credit score.
So your job or your salary has no connection with your credit score.
However, having a good credit score may help you get approved for your job application since most employers usually check the applicants’ credit reports.
So if you are going to apply for a job, it will probably benefit you to have a good credit report because your employer may decide based on those factors.
All Bills Affect Your Credit Score
Your rent payment, cell phone bill, car insurance, or your utility bills all this stuff will more than likely never affect your credit score.
If you miss a payment by a couple of days, don’t sweat it.
Likewise, if you feel like you have paid all your stuff on time when it comes to those bills, don’t assume that you even have any credit.
But if for whatever reason you are way behind any of this stuff, technically they can report it to a collection agency.
If it ever does get to that severity, that will negatively impact your credit score.
Paying bills on time is a must, as you don’t ever want to get so behind that it goes to a collection agency.
Loan Application Denials Hurt Your Credit Score
Your denial of a loan application has nothing to do with your credit score, just like being approved for a loan doesn’t improve your credit score. Credit approval or denial has nothing to do with your credit score whatsoever.
The only thing you need to know is that applying for any loan or credit card will negatively affect your credit score. That is called a credit inquiry, that will go on your credit report and will lower your credit score.
So the main thing to know just keeps your inquiries low.
Don’t apply for new credit cards every couple of months, don’t apply for a car loan every year, just keep the inquiries low.
Everyone Has Credit, And Everyone Needs Credit
There are plenty of people who don’t have a credit score and may never have it. If you are going to apply for a loan, you will probably have and need a credit score.
But if you pay cash for everything, you never have to worry about putting a down payment or security deposit.
But remember that having a credit score is not a bad thing.
If you get an apartment and want to avoid putting in security or need a loan with low-interest rates, holding a good credit score may help you out in those situations.
Actually, you don’t necessarily need it, but most people will benefit from having one.
Building Credit is Difficult
You can build credit easily as long as you follow some pretty simple rules.
The rules are like this: try to avoid getting into debt, if you are in debt, make sure to pay your loan on time as agreed.
Lastly, if you use things like lines of credits or credit cards, understand that keeping your balances low compared to their limits will help you build credit.
Fix Your Credit Score Fast
Getting rid of bad credit history is not an easy task as the evidence of credit repayment sticks to your report for a long time, typically for up to seven days.
But in case of bankruptcy, the information stays on your credit report for up to 10 years.
Be sure that none of the credit repair companies can do more than you can do on your own.
The only thing that similar companies can do for you is to establish a plan for debt repayment.
Trust no huckster that promises to erase your bad credit records in exchange for money.
The only way out in a similar situation is to start the credit repair process by yourself or ask a company for a professional favor.
A financial consultancy may also be helpful in getting rid of bad habits and adopting healthier ones.