Your credit score is complex, but understanding more about how it works empowers you to improve your credit report. Take note of these five common money myths so that you can raise your credit score — and avoid hurting it.
Myth #1: It’s impossible to improve credit score.
The truth: You can rebuild credit over time with patience and good debt management. As you consistently make prompt payments, lenders will notice the negative marks on your credit history less.
Myth #2: Checking your credit can hurt your credit score.
The truth: Pulling your own credit report, also known as a “soft inquiry,” doesn’t affect your credit score. In fact, regularly checking your credit report is a responsible financial practice. You are entitled by law to one free report from each of the three reporting bureaus every 12 months.
Keep in mind that if a lender pulls your score to approve a new line of credit, it is a “hard inquiry” and can lower your credit score. You typically have to authorize this process.
Myth #3: Closing old accounts can boost your credit score.
The truth: Closing an account lowers your available credit — which can raise your debt-to-credit ratio and therefore lower your score, especially if you carry balances on other cards.
Myth #4: Closing old accounts can shorten your credit history.
The truth: Accounts with no negative marks that are paid in full will remain on your report for 10 years after being closed.
Myth #5: Cosigning for a loan or credit card won’t affect your credit score.
The truth: You are just as responsible if the borrower misses a payment or exceeds his or her limit — and your credit score will be penalized.
Melanie Villeneuve, Owner of State Farm Insurance, Melanie Villeneuve Agency in Palm Desert has more than 20 years’ experience with business and personal insurance, investments and loans. For more info, contact Melanie at email@example.com
By: Melanie Villeneuve
State Farm Insurance Agency Owner
Last modified: March 13, 2019