Top 5 Credit Score Myths
If you plan to boost your credit score in 2012 due to our super low interest rate environment, here are the top 5 credit score myths to be aware of:
Myth #1: Closing a card after paying off a massive debt load is a fine idea.
While it is very important to pay off any outstanding debts you may have, it is a common misconception to close that same account once it is paid off to increase your credit score.
This, in fact, can lower your credit score because it affects the amount of available credit you
now have at your disposal.
Myth #2: Your employment history impacts your score.
While having a steady job will help you qualify for more loans, your credit score does not take into account your employment history and work record.
Myth #3: Financing a big purchase — like a new home or car — will lower your score.
Contrary to popular belief, using credit for a large purchase can actually help your credit score because a large purchase like a house or a car represents a different line of credit. A variety of credit types accounts for approximately 10 percent of your overall score, so keep that in mind.
Myth #4: The older you are, the higher your score.
While typically the older you are the longer you have established credit, your age bares no factor. However, keeping the lines of credit you have had the longest helps your score because it shows a longer credit history.
Myth #5: Checking my score will lower my score.
Checking your credit with the three credit bureaus is actually recommended on an annual basis. This does no harm to your score. Even shopping for mortgages or car loans and having multiple inquiries from creditors within a short period of time will likely not harm your score either.