Your credit score is extremely important when you plan to borrow money from a financial institution. This can be anything from a credit card, getting approved for a mortgage or even a student loan.
You’ve probably heard reports of things that can possibly improve or hurt your credit score. Many of them may sound true, but in reality, are actually false. If you’re not entirely sure what to believe, we’ve got you covered. Here are a few of the most common credit score myths debunked.
Asking for your credit score hurts it
This is one of the most common credit myths out there. You can request and receive your credit score without taking a penalty towards your score.
However, if a third-party lender requests for your credit report when applying for a line of credit, your score can be impacted. Always do your research before applying to borrow money.
Closing credit cards helps improve your credit score
This myth definitely has a certain logic. But it may not always be true. Getting rid of a credit card ultimately decreases the credit available to you and limits your credit history for that account – and potentially your credit score along with it!
Co-signing does not affect your credit score
Co-signing a loan makes you liable for that debt. If the other party happens to miss a payment, or defaults on the loan, your credit score is affected just as much as theirs. As a general rule of thumb, if you can stay away from co-signing – you should!
Paying the minimum keeps your score up
Creditors often look at the amount of debt you owe in comparison to how much debt you have available. If you carry a large amount of debt, paying the minimum payment alone, may not help to move the needle on your credit score.
Your credit has a great influence on your ability to open bank accounts, secure a loan, and have a credit card with a reasonable interest rate – which is why it’s so important to understand it. So, when it comes to financial matters that may have the ability to impact your creditworthiness, always remember to do your own research and ask the right questions.