When it comes to your credit score, everyone has an opinion. Some folks tell you that you need to have many credit cards open in order to have a good credit score. Some folks tell you that you need to be wealthy in order to have a high credit score. Some might tell you that credit scores are almost random, and that there’s very little you can do to affect yours.
The fact of the matter is that you can’t always believe what you hear about your credit score. Some things just aren’t true at all, and knowing some of the myths will help you to do what you need to do in order to improve your credit score.
Here are some of the most common credit score myths:
- The more money you have, the better your credit score. This is utterly false. Your income has nothing to do with your credit score at all. Yes, if you have more income, you’re more likely to pay your bills and to have a better credit score, but no one looks at your income to determine your credit score.
- Having a good credit score requires a bunch of debt. This isn’t true, either. In fact, people who have the very best credit scores – over 800 – tend to have less debt than people with scores in the 700s and 600s. Instead, they paid their bills on time, and they held onto their accounts longer. In fact, you should never have more than about 30 percent of the credit available to you in use.
- You’re better off without any credit. This isn’t necessarily true, either. The fact of the matter is that even your car insurance company can look at your credit score to determine your rates. Having a good credit score can help with things like employment, too.
- No credit history means a poor credit score. Now, don’t misunderstand us. If you have no credit history, you’re not going to have a credit score above 800. Instead, your score will probably start somewhere in the 600s. This is an average or just below average credit score. To actually get a poor credit score, you need to miss payments and get far into debt.
- It’s almost impossible to raise a poor credit score. This is untrue, as well. Even if you’re down in the 400s or 500s, you can raise your credit score. In as little as a year, if you make all your payments and reduce your ratio of credit to actual debt, you could raise your credit score by as much as 100 points.
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