5 Common Myths About Credit Score Debunked

Whenever you talk about your poor credit score, have you heard about the common elderly shoot finance-related rumors confidently? Well, how can you blame them?

Due to ignorance or lack of knowledge, you would hear many false facts about credit scores. People aren’t quite sure if what they think they know about credit scores is true or if they're just myths.

But believing in rumors and not validating the facts beforehand can lead to troublesome financial decisions. Therefore, we’ve compiled five common myths about credit scores and the reality behind them. So, get into your serious decision-making zone and read through!

Myth 1: Checking your credit score repeatedly impacts your score

This is so not true. There’ll be no effect on your credit score even if you keep checking your report regularly. However, if multiple lenders enquire about your scores during a common period, it can affect your credit score by a little bit.

That’s why the best thing would be to check your credit report after regular intervals. This allows you to improve your score.

Myth 2: Your income is an active contributor to your credit score

False again! Your credit score is only an outcome of your credit report. And that report has got nothing to do with your income. You may have a salary sum of lakhs. However, if you aren’t maintaining your credits well, you’ll still be far behind in the game.

Myth 3: Closing obsolete bank accounts improves credit score 

This is not really the situation. Most people tend to believe that having more than one credit card can lower your credit score. And consequently, such people give up old accounts by cutting down the obsolete credit cards. 

In reality, though, such an action can affect your credit score inadvertently. A longer credit history gives an account of your credit behavior. Therefore, consider giving up your old credit card only after you’ve analyzed well to find that you won’t be using it judiciously. 

Myth 4: A good credit score is a symbol of your wealth

As previously said, you may earn lakhs but that’s not going to affect your credit score. Therefore, whether or not you have a good credit score is not going to represent if you’re rich or poor. A credit score is only limited to measuring your credit risk.

Myth 5: A bad credit score cannot be improved ever!

Hey, don’t worry if you think the above is true because it’s not. 

A credit score represents your credit history. If you have a low score, you can still try and improve it and turn it into a good score eventually. The key to improving your credit score is to follow good practices and make wise decisions as you give up on your foolish transactions. Remember, there’s always hope for improvement!

What SHOULD you do to improve your credit score?

A good credit score is a sign of creditworthiness to lenders. It helps you bag the greatest offers with a solid background of financial responsibility. Your credit score can affect your assets and you don’t want it to happen if you wish to create an estate plan.

So, here are a few tips to improve your credit score gradually:

• Pay all your bills regularly
• If not entirely, break your large bill amount into segments and complete the payment within the given period
• Switch to the auto-pay feature instead of the manual and keep track of it
• Make careful analysation before considering closing an old account
• Check your credit report at regular intervals
• Avoid applying for multiple credit cards or loans in a short period