Top Myths You Need to Avoid When Improving Your Credit Score 🚫💸

Looking to boost your credit score, but not sure where to start? There may be a few myths and misconceptions floating around that could be holding you back. Here are some of the top myths you need to avoid when improving your credit score.

Myth #1: Checking Your Credit Score Will Lower It 🙅‍♀️📈

One of the most common credit-related myths is that checking your credit score will actually lower it. This is simply not true! In fact, checking your own credit score is considered a “soft inquiry,” which does not impact your score at all. It’s when a lender or creditor checks your score as part of a credit application that it becomes a “hard inquiry,” which can lower your score slightly. So go ahead and check your score as often as you like, without worrying about any negative impact!

Myth #2: Closing Unused Credit Accounts Will Boost Your Score 🚪💳

Another common myth is that closing unused credit accounts will automatically boost your credit score. While it may seem like a good idea to get rid of an account you’re not using, doing so can actually hurt your score. This is because it can decrease your overall available credit, which can increase your credit utilization rate. Instead of closing accounts, try to maintain a low balance on all of them, since having a high credit utilization rate can lower your score.

Myth #3: Paying Off Collections Will Improve Your Score Right Away 💸💰

If you have past-due debts that have gone to collections, you may think that paying them off will immediately improve your credit score. Unfortunately, this is not always the case. While paying off collections is definitely a good thing to do, it may take some time for the positive impact to show up on your score. This is because collections may still remain on your credit report for up to seven years, even after they’ve been paid. However, it’s still a good idea to pay off collections, since leaving them unpaid can hurt your score even more.

Myth #4: Having No Credit History Is Better Than Having Bad Credit 😶💳

Finally, some people may think that having no credit history at all is better than having bad credit. While it’s true that having bad credit can negatively impact your financial options, having no credit history can also make it difficult to get approved for loans or credit cards. This is because lenders may not have any information to go on when evaluating your creditworthiness. If you don’t have any credit history, consider opening a secured credit card or taking out a small loan that you can pay off quickly, in order to start building your credit in a positive way.

By avoiding these common myths and misconceptions, you can improve your credit score in a way that’s smart, effective, and sustainable. Remember, the most important factor in improving your credit is to make all of your payments on time and keep your balances low. With a little bit of patience and some good financial habits, you’ll be on your way to a stronger credit score in no time!