March is National Credit Education Month, which means now is the perfect chance to discuss some of the ins and outs of your credit score. And there are quite a few harmful myths or misconceptions surrounding it that many prospective borrowers believe.
What’s true: Only “hard” inquiries or hard checks can ding your score a few points, but not if you check on your own, which is considered a “soft” check.
On the other hand, soft inquiries don’t have any effect on your score at all. This is when you check your credit score and credit report on your own from the three major credit bureaus (Equifax, Experian, TransUnion). It is recommended that you monitor your credit score over time through routine checks to help you track your progress when building credit, and to catch any problems before they get out of hand.
You can now easily check your credit score on websites such as creditkarma.com or annualcreditreport.com, or with most card issuers. Also, due to the COVID-19 pandemic, all three credit bureaus are offering free weekly online reports through April 2021.
What’s true: Closing a credit card is more likely to hurt your credit score than to improve it, especially if you close the card with a balance.
What’s true: The only thing a running balance on your credit card increases is the interest you owe and certainly not your credit score. In fact, it only has the potential to lower your score and it will end up becoming a waste of money since you need to pay interest over time.
What’s true: Even after you tie the knot, you and your spouse remain to be two individual entities with separate credit scores and credit histories. So just because you marry someone with a good credit doesn’t mean that your credit score will automatically improve. Likewise, marrying someone with bad credit won’t adversely affect you.
What’s true: Your income does not directly affect your credit score. Also, it is never included on credit reports so it can’t impact your score.
If you’re applying for a mortgage, lenders will assess your earnings and your credit score as two separate pieces, before approving you for a loan.
So no matter how much money you have or how much you’re earning, making on-time payments on any outstanding accounts is the best thing you can do to improve your credit score.
