Understanding Your Credit Score – Part 3

In our last installment of this series, we’ll address common myths about credit scores and set the record straight. If you missed parts 1 and 2 about how your credit score is calculated and steps to take to improve your score, be sure to take a look!

 

Myth #1: Checking my credit score lowers my score

Checking your credit score won’t hurt you but you need to do it right — meaning, you need to check it yourself. Apps such as Discover’s Credit Scorecard and Chase’s Credit Journey enable you to check your score for free whether you use their credit card or not.

Myth #2: Your income affects your credit score

It’s widely believed that a person’s income level affects their credit score – and if you get a raise, your score goes up. A recent study by Credit Card Insider shows that roughly 2/3 of Americans believe this is true. Yet income has nothing to do with your credit score. The first blog post in this series discusses what factors affect your credit score – income is not one of them.

Myth #3: Using debit cards will help your credit score

The same survey showed that 42% of people believe that using a debit card can impact your credit score. Even if you use your debit card and select “credit card” at the check-out terminal, a debit card is essentially the same as using cash and does not affect your credit.

Myth #4: Closing a credit card account will help your score

As we discussed in the first post, credit history is one of the factors that impacts your score. The longer your history – especially if it’s in good standing – the higher your score. When you close an account that you’ve had for a long time, it’s no longer part of your history and can actually have an adverse effect on your score. It’s better to leave accounts open, even if you no longer use them – or be selective about which ones you close.

Many people don’t realize that having rent payments reported to the credit bureaus can help your credit score – but they’re not reported automatically. A solution like RentReporters can help raise your score in just a couple of weeks. Find out more at https://www.rentreporters.com/price/.

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