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Published On: Mon, Sep 10th, 2018

The 5 Evil Credit Score Myths That Forever Hurt Your Credit Score

Most people have a difficult time figuring out how the credit scores work. And with good reason as there is always a lot of conflicting information that surrounds the topic. Not to mention the well-intentioned advice that can also end up being wrong at the end of the day. For these reasons, it is no surprise that there will be credit score myths abound and haunting most people. Most of these common fallacies can end up hurting your credit score even more and lead your finances to a darker path. But fear no more. This article has summed up some of the top evil credit score myths and the lies behind them. Keep reading.

photo/ Michael Jarmoluk via pixabay

 

  • You can never be approved for anything with a bad credit score

This is one of the most common fallacies about credit scores. The truth behind it, however, is that bad credit scores only make it harder for lenders to approve you for a loan. But it is important to note that a bad credit score is not the only factor that is considered when evaluating your chances of being approved for a Lendgreen loan. When a lender is assessing your creditworthiness, your level of debt and income will also come into play and can be what makes the lender approve your application even if you have a bad credit score. You may still be required to pay higher interest rates or security deposit.

  • You need to get debt to build your credit score

Not true. You will need to make use of the credit products available to you. You do not necessarily need to get yourself into debt for you to build your credit score. Simply open a credit card and charge a small amount with it and pay it off each month. Even that can build your credit score. There is no need to create more debt that you cannot afford and end up being more financially stressed.

  • Late utility bill payments are also included in credit scores

The truth to this is that not all of the utility payments are always reported to the credit-scoring firms. You will notice that some, not all, utility firms only report late payments or the payments that have gone into collection. Other utility companies report even the on-time payments. It is for this reason that you need to play safe and try as much as you can always to pay any outstanding bills as soon as you can. Outstanding bills that have gone into collection can have lasting damaging effects on your credit score. Even the small bills can take your credit score down a dark financial path if left unattended.

  • Checking your credit will harm your score

At this point, you need to know the difference between a soft inquiry and a hard inquiry. The soft inquiries, for example, checking your credit score, do not harm it in any way. It is wise to regularly go through your credit score to make sure that all the numbers add up.

Hard enquiries come about when a lender checks your score. This can happen when you make a loan application. One inquiry will take your credit score back by five points or less. But that is still a lot of points.

  • Your income, investments, and bank accounts impact your credit score

There is no information about your income or investments or bank accounts that is ever reported to the credit bureaus. And this is the reason why they never appear on your credit report or impact your credit score. Other factors like unpaid bank fees that have been sent to collections will, however, show up and affect your score.

Author: Christopher Kay

About the Author

- Outside contributors to the Dispatch are always welcome to offer their unique voices, contradictory opinions or presentation of information not included on the site.

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