Because of less knowledge, many fake news and myths about credit score keep spreading. People find it hard to justify the validity and applicability of these myths and rumors. However, keeping faith in these myths can sometimes cause you trouble. Therefore, here in this article, we will be talking about 11 myths about credit score.
Table of content
- Checking the credit report will hurt your score.
- Bad credit scores will last forever.
- Credit scores depend on your annual income.
- Marriage will merge your scores.
- You can access the credit report that your lenders can see.
- Debit cards create credit scores.
- Applying for new credit will hurt your credit scores.
- Controversial credit report information will increase your credit scores. Ending credit cards will increase your credit scores.
- Debt repayment will delete transactions from the credit report.
- A credit reporting agency can repair your score.
Checking the credit report hurts your score.
Checking your credit report totally will not hurt your credit score. If many lenders ask for your credit details in a short time, it may damage your score and leave a wrong impression on potential lenders. It’s a good habit to track your credit report and score it regularly, such as every 3-6 months. This will give you a realistic check and give you space to improve your financial behavior if necessary.
A bad credit score lasts forever.
A credit score is an indication of your past financial position. However, this does not mean that once you get a low score, it will be with you all your life. You can try to build a good credit record. In turn, you can get a good credit score over time.
If you get into the habit of following all good practices and skills, you can get good scores and make the bad deals of the past disappear. Typically, a transaction is retained in your report for about three years. Details such as bankruptcy and arrears of repayment may last for 10 years. However, there is still hope for getting better.
The credit score depends on your annual income.
The credit score does not depend on your annual income. A person may get 816 points and an annual income of 500000 rupees. Similarly, people with an annual income of 100000 rupees may not have a credit score. The credit score depends on how much credit you have and how well you manage it.
With an annual income of 100000 rupees, if you have never used a credit card or received any loan, you may not score at all. In contrast, you may have an annual income of 500000 rupees and a well-maintained credit card. This will result in high credit scores, up to 814.
Marriage will merge your scores
In fact, there’s nothing better than merging your credit scores. Regardless of your marital status, your credit score is determined by your personal financial behavior. Having a joint bank account will not change your credit history and score.
You can access credit reports that lenders can see
It is a myth that consumers get the same version of credit reports as lenders. The credit rating agency provides the lender with a detailed version of your credit report. Whereas, you will get the credit report in a more concise way, which only provides the details you need to know, whether it is a free copy or a paid copy.
A debit card establishes a credit score.
A debit card does not help you establish your credit record or obtain a credit score. As the debit card is a way to access your savings account balance and does not contain the concept of “credit”, any transaction using the debit card will not be regarded as establishing your credit history or credit score. You must use a credit card or loan to open credit history quotas. Once your credit history is established, your credit score will be generated. However, it takes several months to shift from NA to score.
Applying for new credit will damage your credit score.
It is a must to know that applying for new credit will not affect your score, as long as you do not apply to all available lenders in a short time. If you apply at each lending institution, each lending institution will send a query about your credit report. A large number of inquiries show that you urgently need financial help, which will reduce your score.
Alternatively, you can apply for credit facilities at a trusted lender’s office. This activity will not affect your score.
Disagreeing about credit report information will increase your credit score.
You can argue about any errors found in the credit report and ask the company to correct them. However, every disagreement you raise will not affect your credit score. If your name, date of birth, and contact information are incorrect, it may cause disagreements. Errors in your bank account details and transactions that you have not done at all may also be controversial.
For questions related to bank accounts and transactions, credit rating agencies will contact their respective lenders for accurate information. If the lender rejects the change you requested, the credit institution will notify you and close your application without changing your report. Conversely, this will not make any changes to your score. All disputes do not need to establish your score.
Ending credit cards will increase your score.
Finishing loans may help improve your score. This does not apply to credit cards. You may consider closing a credit card account you rarely use. However, credit rating agencies believe that this is a negative action. According to the agency, you must be able to handle few credit lines well to get high scores. They recommend even if you do not use the old card, it is good that you keep it active and use the card for nominal transactions. Closing your old card account will not have any positive impact on your score.
Debt repayment will delete the transaction from your credit report.
Don’t fantasize that debt repayment will delete the entry from your credit history. Evidence of debt will remain with your credit history for many years and affect your credit score and credit availability.
These kinds of entries in your credit history will indicate that you have to deal with the debt responsibly and have successfully repaid the debt. This will reassure any potential lender and say a good word to you. On the other hand, any missed payment and registered default can tell the lender your financial processing ability and prevent them from approving your credit application.
Negative information can be retained in your report for up to seven years; Bankruptcy information can be kept for up to 10 years.
A credit reporting agency can correct your score.
When you are looking for measures to repair your low credit score, you may encounter “credit repair agencies”. Depending on this name, some people may mistake these institutions for companies that can spend money to repair a low score and improve it to a good score overnight. However, it does not work like this.
If you can find errors in your credit report, the credit repair agency will help you submit disputes to the credit rating agency. Errors range from errors in your name to errors in transactions registered in your name in the report. If you don’t have the time or knowledge and don’t know how to raise an objection to the error, the credit repair agency can do the necessary things on your behalf to help you.
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