Credit score- Myth busted
Credit scores now rule the financial life and can help to decide whether you can borrow funds.
These are used as basis for interest rates which will be offered for the amount of credit qualified.
Everyone may be aware of the importance, which is true, but there are clouds of falseness, which
cover the minds of several people.
Credit grading is based on the credit report which is offered by three credit bureaus – the
Experian, Transunion and Equifax. It is the right of every US citizen to have annual credit report
from the agencies. Credit file is detailed information about an individual’s financial life. The free
credit reports are used by lenders to review your grades, as this symbolizes the credit worthiness
of an individual.
Few myths that pop up in the minds of people can be found below:
1. No! Employers do not seek candidate with good credit score
What employers have to do with your credit scores? Employers have a look at credit report,
when you seek for profile, which involve handling lots of money. Your spotty file is hindrance
from acquiring a good job. Watching your credit score will be an advantage if you’re
searching for a job.
2. Carrying a credit card balance is not at all good for your credit score
One of the biggest misconceptions that prevail in the minds of many is that to witness an
improved score, one has to carry debt. 35 percent of your score can be boosted by showing
regularity or punctuality of payment in the past.
3. Closing a credit card account will not let you lose the benefit of that history
Closing a credit card account and the amount of debt on the card related to present credit limit
can contribute in ruining your score. But average age of account also participates in calculating
your credit score. Closed accounts mark its presence on the credit report till certain period. Old
accounts keep on maturing and remain on the record.
4. Opting out of credit card will not improve your score.
You can never improve your grades by getting rid of credit cards. A lot of times, people
cancel their credit card because they do not use them. By closing cards you are hurting your
credit utilization number.
Instead of surrounding yourself with myths, be informed about the ways which can enhance your
credit score. By regularly monitoring your credit file, checking for errors and financial
management, you can lift your credit grades up, which is desirable in today’s era.