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Common Credit Score Myths

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There is a lot of information out there about credit scores, but it’s not always accurate. So, let’s take a look at some of the common credit score and credit report myths, and why they are not accurate.

Myth: A poor score means I won’t get credit.
While it is true that a poor score will hurt you from getting credit (and from getting a good interest rate on your credit), it doesn’t necessarily haunt you. It is just one of many facts that a creditor might use, so you could still get credit if your overall portfolio is solid (or vice versa, get denied even with a good score). Plus there are ways to repair your credit.

Myth: You can never close a credit card.
While it might not be a good idea to close accounts if you don’t have a lot to begin with, it shouldn’t hurt you as long as you have adequate credit. While I would avoid from closing an account that has a high credit limit, or one that is your oldest account, it shouldn’t hurt you to closer smaller accounts.

Myth: You need to limit the amount of credit cards you have.
Many people believe that if you have a lot of credit cards, you will be seen as being too risky and it will hurt your credit score, even if you don’t have a high amount borrowed or owed. The key is to not have too many that they are hard to keep track of, because you definitely don’t want to miss any payments. As long as you are not hurting your credit utilization and you are paying your bills on time, it shouldn’t make much of a different how many cards you actually have.

Myth: Checking your credit report hurts your credit score.
People get confused when it comes to the different types of card inquiries, including believing that it hurts your credit score if you check your own report. This is not true, because that is seen as a soft inquiry. So, feel free to check your own credit report (and you NEED to do this) – it won’t hurt your score.

Any other credit score and credit report myths that you have heard?

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2 Responses to “Common Credit Score Myths”

  • I believe the often repeated advice about closing your oldest account belongs in the myth category as well. Once closed the history remains on your report for seven more years!

    Yes, length of history is a factor in scores. By the time the history on that account rolls off your credit report seven more years of history have been added.

  • Jon says:

    Thanks for the insight Kevin! I didn’t know that about it remaining on your report for 7 more years… in light of that, it’s probably not as bad as people often say. Thanks for chiming in!