As i recently began examining my credit history to work out how i could improve my reputation, it occurred to me it may be a good time to write another article on the subject. And a good place to start for me was popular credit score myths, as there are plenty about.
Earnings Dictate A Score
That is not always the case. Many people believe that a raise or a better-paying job will improve their credit score. Unfortunately, this is one of the most widely held credit fallacies. Your salary isn’t taken into account while calculating your credit score. While your employer information may appear on your credit report, it has no bearing on your credit score. It has no bearing on your demographics.
Of course, if you spend some of that extra money to pay down debt, a greater salary can enhance your credit score. You are less likely to miss payments if you have more money on hand.
Popular Credit Score Myths – All Debt Counts The Same
No, some debts are more important than others. A high credit card debt is regarded with greater mistrust than a small mortgage loan. Furthermore, some sorts of borrowing, such as those from a corporation with a shady reputation, are not regarded as “positive” as a loan from a reputable bank. It matters what kind of debt you have. The credit score algorithm takes this into account.
Closing Cards Will Improve Your Score
Many people believe this misconception, yet the situation is not so straightforward. It’s easy to imagine that paying off debts is a good thing, and that prospective lenders will view it favourably in the future. Closing a credit card, on the other hand, may harm your credit score rather than boost it. Maintaining a credit card balance, making regular repayments, and not maxing out all of your cards are often more beneficial.
Previous Occupants At Address Could Affect You
This is not the case. It no longer matters if the former occupant of your home was a millionaire or a bankrupt when it comes to your credit score. This is true as long as there was never a financial tie between you. The only thing that matters to lenders is that you repay them on time and in full. They do prefer consistency, so if you’ve recently moved, they’ll want to know your old address so they can double-check. Living at a constant pace for an extended period of time has just a minor positive effect. This is one of the most widely held credit fallacies.
Popular Credit Score Myths – A Lack Of Past Credit Favours You
You’d think that a person with no credit history would be appealing to lenders, but this isn’t always the case. Lenders want to see a track record of timely and complete repayments. This demonstrates to them that you can manage debt. They can’t be certain if you’ve never borrowed because there’s no proof. Most lenders want to see a credit report that shows a few well-managed loans or credit cards with consistent payments.
