People are always on the lookout to save money. However, when buying a home or worrying about a big purchase, plenty of people don’t have the best credit score. While true, there is plenty of misinformation out there. With this in mind, here are the top five credit score myths dispelled.
Avoid using cards at all
In reality, if you use your cards all the time and pay off your bills, you will help your score. Sadly, some consumers take the wrong advice and end up trouble. Remember, if you have the discipline, you need to use your credit cards for monthly expenses. Then, you will watch your credit score increase.
Closing unused or old accounts will help your score
All-too-often, in a rush to improve one’s credit score, consumers will often close old and unused accounts. This is a massive mistake! Instead, if a customer doesn’t use a given card, he or she should simply put it away. Then, one should use the card once or twice a year to ensure that the company doesn’t close the account. When doing so, you can keep your credit score intact.
If a person doesn’t pay his or her credit card or other bill for a few years, it may be wise to let it go. Sadly, people will usually call up the credit card and negotiate a payment plan or settlement. While it may feel like the right thing to do, it can hurt the credit score of a consumer. Instead, at this point, one should hold out.
Apply for credit all the time
When applying for a loan or credit card, one will see a slight ding on their credit score. In the long run, this is not too harmful. On the other hand, when a consumer has five or six inquiries, he or she will hurt their score temporarily. While not a long-term problem, if a person wants to obtain a mortgage, he or she should try to cool it on the applications.
Available credit is not relevant
The more credit a person has, the better score he or she will possess. For this reason, one should not fear large credit lines.
With these five credit score myths dispelled, a consumer can keep his or her score high. Then, when looking to borrow money, one won’t overpay on their loan.