Misconceptions About Credit Scores

by Susan Paige on July 10, 2020 · 0 comments

There are a lot of myths and misconceptions when it comes to credit scores. Even if you think that you know a lot about how to get and maintain good credit, you might fall for a few of these misconceptions. They sound reasonable, but with more research, you’ll realize that they’re incorrect. Here are some of the biggest credit score misconceptions:

Myth: It Takes a Long Time to Improve a Credit Score

Many people mistakenly believe that it takes years to improve your credit score. However, that’s not the case at all. In fact, there are small and big tricks that you can implement to start improving your credit score today.

Quickly Boost Your Credit Score

There are a number of tools and tricks that you can use to quickly boost your credit score by a few points here and there. Those points add up. 

For example, Experian Boost allows you to link your utility payments to your credit account. Then you can finally get credit for paying those bills on time.

Use Tradelines to Improve Your Credit Score

Tools like Experian Boost will quickly improve your credit by a few points. But what if you need to really bump up your credit score? One smart opinion that a lot of people aren’t aware of is working with a tradeline company.

If you’ve never heard of tradelines before, don’t worry; they’re easy to understand. Tradelines are simply each item listed on your credit report. Every time you review your credit, you see a list of accounts. The ones you’ve had the longest (if paid on time consistently) are your best tradelines. The more of those you have, the better your credit.

A tradeline company such as Coast Tradelines can help you boost your credit score by selling you tradelines. Basically, anyone who has excellent credit can add you to their best tradelines. They simply make you an authorized user. Then you automatically get linked to those long-standing tradelines. This can significantly improve your credit store.

 

Myth: Paying Off Debt Always Improves Your Credit

Generally speaking, paying off debt through on-time payments will improve your credit. That said, there are exceptions.

If you owe a lot of money, your credit card will sometimes decrease your available credit. Sometimes, they do this as soon as you’ve made a payment. For example, if you owe $6000 on a credit card with a $6500 limit, then you pay $3000, they might immediately lower your available credit to $3500. 

They take many things into consideration before doing this. That said, if it happens, it affects your credit utilization number. This can mean that you don’t get a better credit score, despite making your payment.

 

Other Common Credit Score Misconceptions

The takeaway here is that most of what you know about credit scores is likely accurate. However, there are often exceptions to those rules. 

Some other common misconceptions about credit scores include:

  • Married couples share a credit score. False: you each have your own score even though you might have a number of joint accounts that show up on both reports.
  • Closing credit cards improves credit scores. Often false, for the same credit utilization reason as described above.
  • There are three credit score companies. Actually, although there are three primary ones (Experian, Equifax, and TransUnion), there are dozens of other credit scores as well.
  • It’s always bad to check your credit score. While an inquiry to get a new loan can ding your score by a few points, checking it alone doesn’t change your score.
  • Your score tells people about you. It doesn’t reveal your job or even your income. Nor does it provide any demographic information. 

It’s perfectly normal if you fell into believing these common misperceptions. It never hurts to re-educate yourself about personal finance issues such as credit myths.

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