Debunking 5 credit myths you should not believe

Learn the 5 credit myths you need to know about now

Are you anxious about your credit score but not sure why? Don’t worry – you’re not alone! Many people are confused by the mysteries and complexities of understanding their credit scores.

However, a few widely held myths floating around out there can be easily debunked if you understand the facts.

In this post, we’ll go over five common credit myths so that you can approach your financial health with more confidence.

With accurate information, let’s dive into these often-misconstrued beliefs and learn how to manage our finances better!

What is a credit score?

Before you learn about the main credit score myths, you’ll need to know what a credit score is. So, we’ll explain a bit about how credit scores work and how they can affect your life.

Moreover, most people don’t learn about credit scores or the credit scoring system until they need one for a major purchase like a house or a business loan.

In addition, lenders often use a 3-digit credit score to evaluate if they will provide credit, what interest rate will be imposed, and what kind of credit (loan, credit card, etc.) will be granted.

Also, your credit score gives the lender an idea of how much of a financial danger you pose to them.

Therefore, each person has a different credit score. If you are married, both of your credit ratings will be considered when choosing how to handle a cosigning loan situation.

So, if you are seen as a bigger risk by the lender, you will have a more difficult time being approved for credit and will pay a higher interest rate when you do.

As a result, borrowing money will be higher than usual. Also, in most cases, the scale range is from 300 to 850.

And you should know that your ability to lock in favorable interest rates and other terms of credit increases as your credit score rises.

Now that you’ve learned more about how credit score work, we can show you the most common credit myths! So, read on the topic below to find out!

5 credit myths not to believe

With all the information available on credit scores, it’s easy to become overwhelmed by the myths and inaccuracies circulating.

So, whether you’re trying to check your score or want a better understanding of how it works, read on!

This way, we’re here to help you out! So, we’ll look at five common misconceptions about credit scores, offering insight into why they aren’t true and replacing them with real advice.

With this information, you’ll be able to navigate credit in the future confidently.

Therefore, check out our list below and remember that these are the only credit myths we need to debunk to have a healthier financial life.

1 – Every time you check your score, it goes down

One of the best things you can do as a responsible credit card user is to monitor your credit score regularly (and for free).

However, the idea that credit checks reduce scores remains because of the vague language used to indicate when a credit file has been checked.

Also, what is meant by the term “inquiry” is a request for a person’s credit history. However, there is a notable distinction between ‘soft’ and ‘hard’ queries.

This way, inquiring into your own credit history is considered a soft inquiry because you initiate it.

Therefore, soft queries do not lower credit scores in the same way they are by harsh ones. That being said, there is no harm in checking your own credit report.

2 – It will work to pay someone to fix your credit score immediately

If you have a history of late payments and do not manage your money correctly, there is no quick cure to getting bad information wiped from your credit report.

Therefore, the best way to restore a damaged credit history is to implement good credit management habits.

Moreover, maintaining a high credit score calls for the punctual repayment of any debt. It is also required to know how credit ratings work and what goes into them.

3 – If you declare bankruptcy, you will get rid of debt

Even while the bankruptcy process may release you from some of your commitments, you cannot pick and choose which debts may be forgiven or erased.

Moreover, filing for bankruptcy is also the last resort: Your credit score might be negatively affected for up to ten years after the bad incident has been recorded.

However, you can even find secured credit cards after bankruptcy, which can help you improve your financial life.

But you’ll need to search carefully because you need to be able to pay for the fees and rates.

4 – Your score considers your job occupation and level of education

Creditworthiness can be determined in several ways, depending on a person’s income, occupation, education, and other personal and external criteria.

Therefore, credit scores are unaffected since none of these organizations provide information to the major credit bureaus.

5 – A low credit score will prevent you from getting financial products

Building credit is difficult if you don’t already have any. But certain credit cards and loans may nevertheless consider borrowers with limited credit histories.

Moreover, applying for and receiving additional credit is much easier when you have a strong credit history and a high credit score.

Therefore, even if you don’t have much of a credit history, there are steps you may take to start building it.

In addition, many banks and credit unions provide secured credit cards to customers with weak or nonexistent credit.

This way, borrowing funds from your credit card issuer will continue to be possible, but a security deposit will now be required to establish your credit limit.

Now that you know more about the credit myths regarding your credit score, you’ll be able to find better ways to build credit over time and improve your financial health!