There are lots of myths out there that will either wrongly make you afraid of ruining your credit score or will give you incorrect information on how to improve it. Therefore, it is very important to educate yourself on the truths so you can correctly work towards having a great credit score! Let’s talk about credit building: MYTH vs FACT.
Credit-Building MYTH vs FACT
MYTH – Spending more money is better.
This may sound sensible at first. After all, you have to spend money to build credit right? But not in the way you think. Having a high balance on your cards will actually hurt your score.
FACT – Try to use 30%-40% of your max credit limit as a rule of thumb.
MYTH – It’s ok to miss or be late on a few payments
Although a low-occasion late payment may not be too harmful, constantly being late makes a harmful impact on your credit score.
FACT – Making your payments on time has a positive impact on your score, and accounts for 35% of it!
The more you know about your credit, the easier it is to maintain a higher score.
MYTH – Checking your credit score lowers it
Checking your credit score is a soft inquiry, meaning it does not affect your score.
FACT– Hard inquiries, such as loan applications (credit cards and mortgages) DO affect credit.
MYTH – You need an agency to repair your credit
Although you can use an agency to do this for a fee, you can also do this yourself.
FACT – You can dispute items on your credit report for free at annualcreditreport.com
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