8 Harmful Myths You Should Ditch If You Want Good Credit
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There’s a lot of conflicting information out there when it comes to credit scores, and what is reported on your credit report (and how, and for how long). You need to get rid of some of the common credit myths out there if you want to really enjoy good credit. We’ve dispelled eight of the most common below.
Myth 1: You should never take on debt
On the contrary, people who avoid using credit can have difficulty accomplishing other set goals financially while those who do will have mastered the art of debt repayment. The world today is credit-centric and your ability to manage your expenses and repay your debts will definitely give you a credible credit history that will come in handy. The goal, however, is not to land yourself in a massive heap of debt but to establish your creditworthiness.
Myth 2: You need to increase your credit score by closing your credit account
You actually hurt your credit rating when you close the account of a credit card that has been paid off. Closing a credit card drops your available credit to zero with no similar effect on the amount of debt you owe. Instead of outrightly closing the account, you can go for the good old-fashioned cutting up the card.
Myth 3: Do not check your own credit if you do not want your score to drop
Admittedly, some credit checks can have a negative effect on your credit score, even if it is temporary. However, an inquiry into your credit score does not cause any drop; it is even encouraged in order to keep you abreast of everything going on with your account.
Myth 4: Your credit score is tied to the money you make
Of course, the income you make is highly considered when you apply for a credit card loan. However, this is totally independent of your credit score which is also considered.
Myth 5: Credit reports and credit scores are the same
Ditch the myth that says credit reports and scores are the same because they are not. Your credit report is a record that gives information about your credit accounts. It is through this report that your credit score is gotten, usually representative of your credit history over time. Your credit score is not included in your credit report.
Myth 6: Once you pay off a debt, there is no damage being done
Unfortunately, this myth has misled a lot of people. When you extend repayment past its due date, it already gets all the debt collectors on your back. Paying them will get these collectors off your back but it will hurt your credit score in the long run.
Myth 7: You can exhaust your cards; only make sure you pay the balance every month
It is important to ensure that your balance is kept lower than 30% of the limit of your card.
Myth 8: You cannot fix your bad credit yourself
There is nothing you cannot do for yourself. No matter how bad your credit situation is, it can still be restored without the help of credit repair agencies, some of which do more harm than good, even the legitimate ones.