Have you ever heard about credit myths? Here’s a tour.

Authorized User Tradelines

It would be impossible not to have heard before about the myths and speculations about credit, credit scores, credit history, among others. And, believe it or not, many people believe these myths, which is unfortunate for them, since the only one affected turns out to be their credit.

Let’s forget for a moment about these myths and open our minds, so that from now on your credit will be different and of course your lifestyle as well.

One of the main myths about credit that exist is:

1. Checking your credit report will damage your credit score.
This information has been found to be completely wrong and detrimental to your credit, as they remain absent from their credit status for fear of damaging their score, they avoid checking it.

Checking your own credit report is advisable, as you can check to see if there may be any incorrect information and correct it by contacting one of the credit bureaus, which does not affect your credit score.

2. Everyone has a credit score. What do you think? This myth is not entirely true, as 2 out of 10 people do not have a credit score. As hard as it may seem to believe, it is true.

Not all people have knowledge about how the world of credit works and that is why a large number of people are in the credit anonymity, they are practically invisible and this invisibility leads them not to be noticed by any bank or company and much less to be taken into account.

As absurd as it may seem, a large number of people do not have enough credit data to calculate a credit score and this is because they, not only ignore the importance of having good credit, they also do nothing to start building a solid credit, until the time comes when they really need it and that’s when the headache arises.

So don’t be one of those who believes that everyone by law has a credit score. Just stop and think; you can’t build a credit score when every time you go to make a purchase, you pay with cash.

On the contrary, you start to build credit when every purchase you pay for is made with a credit card, real estate store credit or a bank loan.

3. Income affects your credit score. The truth of the matter is that your credit score doesn’t care about your income at all. However, your income can affect your credit indirectly by influencing the “five C’s” that have been shown to predict credit performance: the ability to repay debts, the collateral backing a loan, the capital available to repay a loan, the conditions affecting income and expenses, and the character of the borrower.

4. People have only one credit score.
There is more than one credit score, but FICO 8 is the credit score most commonly used by lenders today, but in some industries, older models or industry-specific models are used.

For example, there are FICO scores designed specifically for auto loans and credit cards, and mortgage lenders are known to use the older FICO score versions 2, 4 and 5. In addition, FICO scores are different for each credit bureau.

5. Create accounts, even if you won’t use them. On the contrary, think about closing accounts you don’t need, it will help your credit score.

It’s best to think very carefully before you act, since credit utilization is an important part of your credit score, and closing credit card accounts will hurt your utilization rate by lowering your credit limit.

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