Credit score: 6 Myths that may affect your financial health

In the present economic situation, a decent credit is extremely important for your financial health. This is because you’ll not be able to qualify for a mortgage, credit card, or any type of a loan at a favorable interest rate with a bad credit . Newspapers, financial websites are flooded with interesting tips to improve credit. Unfortunately, not all the tips are good and there are lots of misconceptions surrounding credit score. Read on to know about 6 common credit score myths that may hamper your financial health.

Credit score myths

Here are some common misconceptions about credit score that you should be aware of:

Myth#1: You must not use credit cards at all

A lot of consumers with bad credit stop using their credit cards thinking that it help to improve their score. However, this may have a negative impact on your credit score. Credit score shows how responsibly you use your credit. When you don’t use credit cards at all, it means that you’re not building credit history. This makes a negative impact on your credit score. Therefore, the financial experts recommend consumers to use credit cards responsibly.

Myth#2: Ordering your credit report will hurt your score

You can order your credit report or check your score as many times you wish. This will not hurt your credit score at all. However, it is advisable to check your credit reports and scores through bureaus or authorized websites.

Myth#3: Closing accounts will increase your credit score

This is a wrong concept. Closing multiple accounts will not increase your credit score. To the contrary, it may hurt your credit score. Credit history accounts for 15% of your score. When you close multiple accounts, your credit history may seem shorter. Thereby your credit score may drop.

Myth#4: There is only one credit score

The actual fact is you have 3 credit scores from 3 credit bureaus namely Experian, Trans Union, and Equifax. You should know that these scores can vary by as much as 50 points or even more. Hence, it is always better to check your credit score from the 3 bureaus.

Myth#5: Your earnings, gender, and age affect your credit score

According to a renowned financial expert, your age, gender or earnings does not affect your credit score. It is true that your employment is shown on your credit report, but it does not hurt or improve your score.

Myth#6: Credit counseling hurts your credit score

It is entirely a myth. A lot of people assume that credit counseling affects one’s credit score. But the fact is, credit counseling don’t factor into credit scoring system nowadays. There is no doubt that it will be reported on your credit report that you are getting counseling, but it won’t have a negative impact on your score.

Finally, several people think that once they get married, their credit scores are merged. But the fact is your credit score remains yours till your death. However, if you and your spouse open accounts jointly, the information will be reported on both of your credit reports.