Credit Scores: 5 Myths That Need Busting
Understanding your credit score and how it works is incredibly important if you want to remain financially secure. We’ve come across a multitude of myths over the years that can greatly affect our funds and cause us to make the wrong decisions. It’s time to put a stop to five particularly common examples. Let’s take a look at some myths that need busting.
Bad Scores Can’t Be Rebuilt
There’s an ongoing myth that bad credit scores simply can’t be rebuilt after they’ve stooped to a certain level. You need not worry about this! Your credit score can be rebuilt with a variety of tactics over time, but it’ll take a while. As mentioned at LendingTree, “A personal loan can help you build or improve your credit.” The same goes for other credit building tactics like taking out new credit card accounts or other contracts. As long as you’re able to pay them on time, you should notice a difference.
Debt Free Is The Key
There are a lot of people who seem to believe that getting out of debt is the key here. While becoming debt free is an incredibly beneficial achievement, it isn’t the be-all, end-all. Ultimately, credit reporting companies want to know that you can pay your bills on time. That’s all they’re interested in! Once you’re out of debt, you’ll need to keep working hard to pay on time.
One Account Is All That’s Needed
If you’re hoping to build your credit score rapidly, you’re going to want more than one account. While it’s beneficial to have a credit card that is being paid off correctly, you’ll only notice a small difference. It’s actually better to have multiple accounts that are all being dealt with effectively. Don’t go opening tens of accounts if you’re not in a sound financial position, however, as it’ll come back to bite you on the behind.
Job & Income Status Is Important
Credit reporting agencies don’t care whether you’re an assistant at McDonald’s or an executive at Apple. Ultimately, job and income status doesn’t come into any decision when a credit check takes place. Your credit is based around your ability to pay off your bills on time and build a solid reputation of trust. If you haven’t managed to do that, your high-flying job won’t be able to save you.
There Is A Blacklist
Whenever you mention a myth like this, there’s always a dedicated selection of people who don’t believe you. But, there really isn’t a credit blacklist! If you’re getting turned down for credit, it’s because of the mechanics of a credit check and what it’s looking for. You’re not being automatically turned away because of a blacklist system that recognizes your name. That’s a good thing! Put time and effort into improving your credit score, and you’ll hopefully get approved in the near future.
Turning around a bad credit score isn’t easy. But, it’s possible to improve it with enough consistency over time. Whatever you do, don’t go listening to any myths that might put you off!