Understanding credit scores can sometimes feel like deciphering a mysterious code. There are plenty of myths and misconceptions surrounding these numbers that dictate so much about our financial lives. Let’s debunk some common myths to help you get a clearer picture of how your credit score actually works:
Myth 1: Checking Your Credit Score Hurts It
Many people believe that checking their own credit score will negatively impact it. In reality, credit inquiries made by the individual themselves do not affect the score. What does matter is when lenders check your credit for applications, and even then, the impact is usually minimal.
Myth 2: Carrying a Balance Improves Your Credit Score
Contrary to popular belief, carrying a balance month to month is not beneficial to your credit score. In fact, it can hurt you in terms of interest costs and your utilization rate. It’s better to pay off your credit card balances each month to show responsible credit management.
Myth 3: Closing Old Accounts Helps Improve Your Score
Closing old accounts can actually hurt your score. Your credit score benefits from the length of your credit history, and by closing an old account, you reduce the average age of your credit accounts, which can lower your score. Keeping old accounts open—especially if they have no fees—can help boost your credit score over time.
Myth 4: A Perfect Score Means You Get the Best Rates
While a high credit score can get you good interest rates, it doesn’t guarantee the best. Lenders look at more than just a score—income, job stability, and other factors play a role too. A perfect score isn’t the only key to getting the best rates; it’s about how you manage debt overall.
Using Life Planner to Clear Up Credit Myths
Life Planner offers excellent features to help you manage and understand your credit score better. With tools for tracking expenses, budgeting, and debt management, it can help dispel myths and provide a clearer picture of your financial health. Regularly reviewing your credit within the app can empower you to make informed decisions about your credit management.
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With Life Planner, you can manage your credit score effectively and take steps to debunk common myths about credit. Download the app today and start your journey towards better financial health!