Credit Score: Truths vs. Myths

Imagine, if you will, a dimension, not of sight or sound, but of numbers and financial mysteries – a realm known as “The Credit Zone.” In this mystical place, your credit score holds power beyond mortal comprehension and serves as the key to opportunity.

With a high score, you can be granted a world of financial peace, paving the path to your success. But lenders beware, for a low score can cast you into the shadowy abyss of high-interest rates and denied dreams. 

So proceed with caution and arm yourself with knowledge, as we separate fact from fiction, for the choices you make may have lasting consequences. Now, let’s step into the dimension known as “The Credit Zone.”

*cue mysterious music*

Okay, so handling your credit score isn’t as dramatic as it sounds, but it is essential. We’re here to help clear up common myths about your credit score to help you navigate the not-so-scary “Credit Zone.”

Myth: Checking your credit score can hurt your credit.

Truth: This is simply not true! Checking your credit score is considered a soft pull and does not impact your credit. You can also monitor your credit score for free with Credit Sense directly from our Mobile App!

Myth: You must keep a monthly balance on your credit card to build credit.

Truth: In the words of Dwight Schrute: “False.” Carrying a balance every month won’t dramatically change your credit score, and you’ll end up paying more in interest. A best practice is to make a few small purchases, then turn around and pay it off immediately.

Myth: Having an excellent score guarantees application approval.

Truth: While maintaining an excellent credit score is incredible and certainly helps, it is not the only factor involved when applying for a loan or credit card. Other things, such as income and employment history, can be taken into consideration as well. So, if you have a lower credit score, you may still get approved, but with a potentially higher interest rate.

Myth: Bankruptcy will ruin your credit forever. 

Truth: Sometimes life happens. If you find yourself in a position where you need to file for bankruptcy, it is okay. It will not ruin your credit forever.  Bankruptcies usually stay on your credit report for seven to ten years, but you can start on the road to rebuilding your credit shortly after the bankruptcy is discharged.

Myth: Closing a credit card account helps your credit score.

Truth: When you close a credit card account, you will likely see your credit score drop. Part of your credit score is determined by the age of the account and utilization, so when you close that account, your credit utilization will go up and can cause a decrease in your overall score.

Now, if you’re running into an issue with annual fees or if you are trying to reduce the temptation of spending, it may be best to close the account in the long run!

Managing your credit score can seem scary, and there’s lots of misinformation out there! We hope that you’ve learned something! Some best practices to keep in mind when managing your credit score are to pay everything on time and keep your credit usage as low as you can!