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7 Common Credit Score Myths You Should Never Believe

Nearly 4 in 10 Americans have no idea how credit scores work — here’s how to beat the odds.

Many U.S. credit cardholders know little about their scores, some have never checked them at all and others still believe some pretty pervasive myths about what affects their scores.

Here are seven credit score myths explained and debunked:

Checking your score hurts it

Keeping an eye on changes in your score or report can help you detect errors, keep track of your spending habits and figure out how to improve your credit — but few Americans are taking advantage of this.

In fact, only a third of Americans checked their credit score in 2020, according to a CompareCards survey by Lending Tree.

The fact of the matter

Checking your credit score or report counts as a “soft inquiry” — which means that it won’t affect your score.

You might be able to check it through your credit card issuer, or get it for free from an online provider. It is a good idea to monitor your credit score regularly.

However, when you apply for a loan or a new credit card, a lender will want to check out your credit score to determine whether you’re a reliable borrower. This particular check counts as a “hard inquiry” and will dent your score by a few points, temporarily.

You only have one score

There are over 1,000 credit scores in use today.

Contrary to popular belief, you have more than one score and it could waver slightly depending on which credit bureau is providing the information.

When lenders check your credit score, they could be pulling up any one of your scores — you have no way of knowing which.

The fact of the matter

The three national credit reporting agencies are: Equifax, Experian and TransUnion. Typical credit scores range from 300 to 850 and credit bureaus generally consider the same factors — like payment history, utilization rate and number of credit products — to determine your score.

However, agencies may use different scoring models and could receive different information when they evaluate your credit. The two most common models in the U.S. are FICO and VantageScore.

Your credit card issuer, for example, might use a different model from a third-party online service.

The higher your pay, the higher your score

A fat paycheck doesn’t necessarily correspond to a good credit score (although it can certainly be helpful).

Credit scores are evaluated based on whether you’ve paid your accounts on time, how much credit you’ve used compared to your total limit, how long you’ve had credit and your credit mix.

The fact of the matter

Your income isn’t included on your credit report, nor is it factored into your credit score. That said, if you’re more financially stable and have been able to pay your bills on time in full, you’re more likely to have a better credit score.

And lenders will assess your credit score and your income and employment status when you apply for credit products.

If you feel it’s time to look for a new, higher-paying job, you can search using a free job board for positions within your industry.

If you’re having trouble making ends meet, consider turning your talents and hobbies into a side-gig to boost your income.

Carrying a balance on your credit card improves your score

Joseph Tanner

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