Find Out the Myths about Credit Score

Find Out the Myths about Credit Score

Find Out the Myths about Credit Score

Much of ourpersonal finances have actually been shaped up with the help of various professional and legal debt relief companies' efforts and cooperation and their debt care solutions like debt consolidation and debt management etc have made us settle our debts successfully to keep our credit report away from harm and blemishes. However, in spite of the presence of credit counseling services, we fall prey to the common myths about our credit score and tend to be misled by them in the long run. Let's know the names of the most common misunderstandings that we have regarding the same:

Paying Bills on Time Will Improve My Score: It's definitely true, but it's not the key to the kingdom. 35% of your FICO score points are directly tied to your regular payment timing, which leaves the rest 65% of your credit score which has got nothing to do with missed payments. Thus assuming that you are maintaining a perfect credit account by just making your timely payments will be a mistake.

Carrying a balance is bad: This rumor is most probably created by the credit card industry itself. Although carrying a balance will cost you to pay higher interest rates and financing charges from a credit score perspective, but there is no harm in carrying a balance on your credit card until it's too high to affect your Creditization', which is a percentage of your credit limit that you carry.

Employee can see my credit score: This myth roots from the misconception when many people treat credit reports and credit scores as interchangeable, whereas the two are completely different things. Employers in most states can check out your credit report as a part of a pre-employment screening but they don't have access to find out your credit score. However, any lender, insurance company, landlord or utility provider can buy your score form any of the three credit bureaus to determine the amount of risk taken during the business with you.

Bankruptcies and foreclosures taint your score for 7 years: Well, this one is partially true, as a short sale, a foreclosure or bankruptcy proceedings can create negative marks on your credit report for at least 7 years. But your credit score can certainly improve with the passage of time and age of that item. All that is needed is patience and good credit maintenance. And if you don't fall back into the same bad financial habits, you can form an impressive credit score in just 3 to 4 years time.

Short sales are better than foreclosures: Let go off the assumption that short sale is actually better than foreclosure for your credit score, as in actuality both have the same effect.

So once you already know about the major myths regarding credit score, you can surely find out some more with further study and research, which put together can help you to maintain a healthy and sound credit score without harboring any fallacies and rumors about the same, which could otherwise block your clarity and understanding of your financial situations.

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