The most outrageous myths about credit scores
See what's true, and what's not, about your credit score
- Like anything important, there are a lot of credit score myths
- If you learn to tell the truth from fiction, you’ll be better off
- Keep in mind, the only way to really improve your credit is to earn it back slowly
We all know how important credit scores can be to your overall financial health. They can allow you to dramatically extend your purchasing power as you become more eligible for loans you can get for your house, car, or business. Your credit can also affect whether you are approved as a renter for an apartment. With your permission, credit reports (not credit scores) have also been used as part of the job application process.
When a single number or calculation is this important, there’s bound to be plenty of rumors connected to it. We’ve got a list of some of the most outrageous credit score myths that are out there. Have you fallen for any of them?
Myth: A bad credit score can’t be improved
When people fall into the trap of having poor credit, they can start to get fatalistic. They think that things will never improve. However, like other negative thinking traps, this just isn’t true.
It is a fact that, over time, even the poorest credit scores can be repaired. While it isn’t easy, it can be done. If you develop a budget and spend less so that you pay off debt, your payment history will improve. At the same time, the ratio between available credit and the amount that you owe will move to a more positive place.
Myth: Bad credit scores happen over a long time frame
Sadly, it doesn’t take too long to send your credit score downhill. Within a few months of non-payments, your credit company can turn off your line of credit. This will become one of the quickest hits to your credit score, and if it happens multiple times, your credit score will rapidly spiral.
Myth: If you have a bad score, there’s a company that can make it better
If your credit score isn’t where you’d like it to be, the only way to make the situation better is to build your reputation for good credit back over time. Credit repair services can help out by trying to talk with credit companies and removing inaccuracies on your credit report, negotiating better rates, different payment schedules.
Wouldn’t it be nice if you could pay someone to make things better? Unfortunately, it isn’t that easy.
However, keep in mind that these services ultimately aren’t doing anything that you can’t do on your own. Also, there have been several instances of fraudulent credit repair companies. If you choose to use one, check them out with third-party agencies like The Better Business Bureau before you engage them.
There are also credit counseling services that can help you strategize about the best ways to consolidate debt so that you can pay it down. These agencies are experts at helping you think of new ways to work your way out of debt and into a higher credit score.
Every time you check your credit, there’s a hit to your score
Although being aware of your credit score and credit reports can be one of the best ways to keep in good standing, many people believe that the act of checking it will be a hit to your score. Luckily, this isn’t true. Be careful, however, who you ask to do the checking. For example, credit scoring services won’t affect the result, while mortgage lending services or services related to other large purchases might. Be sure of the impacts before allowing any other third party to check your score, and you should be fine.
A deeper dive – Related reading from the 101:
- You’re not alone in these money mistakes | Finance 101
Plenty of people make these mistakes, but you can avoid them.
- How to eliminate your debt for good with the snowball method | Finance 101
This technique can help you pay down debt and improve your credit faster.