Your credit score is what tells banks and lenders whether or not they can count on you to make payments. A good credit score is an indicator that you have been financially responsible over time. Unfortunately, credit scores can be quite complex and there is a ton of misinformation out there that leads people to make bad financial decisions in order to boost their scores.
Today, we want to take you through five common credit score myths that you should avoid getting sucked into at all costs.
You Can Boost Your Credit By Making Tons of Small Payments
All payments made before a single due date will only count as a single payment, no matter how many you make. There is no way to trick lenders into giving you a higher credit score. The only thing that matters is whether or not you pay off the allotted amount by the time the money is due.
You Only Have One Score
One myth that people hear very often is that they only have one credit score, as most people only ever check their credit scores through a single scoring system. However, there are actually many types of credit scores out there, many of which different lenders will look at to determine whether or not to give you money.
There is no one-size-fits-all credit score out there and any lender has the ability to pull from several sources to get a good idea of your financial history.
The FICO score, which most people have heard of, is one of the oldest credit scores out there. It was originally developed for auto loans and mortgages. Experian is one example of a credit bureau that developed a different type of score to help lenders assess credit.
Close Old Accounts That You Don’t Need
You never need to close an old account. In fact, an old account might be worth keeping open if you have a good payment history, as it adds positive age to your account. A closed account can still impact your score, so there’s truly no point in taking the time to close accounts.
Lenders See The Same Score As You
You will never get a true picture of your credit score unless you closely monitor your FICO score. Many people simply check the credit scores that free credit bureaus give them, which isn’t enough to see the full picture. Just know that if you are someone who only ever checks your score through a platform such as Experian, you may never see your credit score like lenders see it.
Making a Late Payment Will Doom You
While a late payment might do some damage, it isn’t going to destroy your credit. Everyone makes mistakes and forgets sometimes. It’s not the end of the world. However, if you are someone that is forgetful often, you might consider signing up for automatic payments.
It is important to remember all of these myths so that you aren’t quick to believe everything people tell you about credit scores. If you’re interested in how you can use tradelines to potentially impact your credit score for the better, get in touch with us at Boost Credit 101 today!