Thursday, May 9, 2013

Common Credit Score Myths Debunked

Credit Scores
Credit Scores (Photo credit: i am real estate photographer)
Ahh myths...they are fun but, when they are about financial stability, they can cause quite the stir! With credit scores being more important today than ever before, it is no surprise that myths have started to form as the result of lack of knowledge about this topic. The truth is, most schools don't teach kids about credit cards and credit scores. When it's time to fend for ourselves financially, we try to just learn as we go. In this process, we often times take suggestions offered up by friends when the truth is, they know no more about the topic than we do. Well, today, I am writing this article to debunk the most common credit score myths! 

Myth #1: Will Checking My Credit Score Harm My Credit Scores?


Over time, I've been told by several people that if I check my credit score, it will harm my credit score. The truth is, this is definitely a myth. How is it that you would be able to manage your credit if your score went down every time you went to check it! Although, this myth does have a reasonable explanation. When consumers apply for loans, their credit is checked. As a result of this check, the credit score will be decreased. However, the decreases are small and consumers would have to apply for a few loans at a time to notice any huge changes. The bottom line is, negative changes as the result of a credit check only happen if the check is requested by a third party for the purpose of issuing credit. 

Myth #2: Is Closing My Credit Card A Bad Idea?


It is a widely thought idea that closing a credit card is a bad idea. But, is this always the case? This idea is a MYTH! Although it's not always a good idea to close a credit card, it's not always necessarily a bad idea either. There are many factors that determine your credit score. One of the factors is the average amount of time your credit cards have been opened. Therefore, every time you open a new credit card, the average time goes down and it causes a minor ding. But, if you open a new credit card and find out it's not something you enjoy, it's probably a good idea to close it, considering you have other accounts that have been opened for a while. As a matter of fact, in this case, it shouldn't do the slightest bit of damage and may have a positive impact. 

Myth #3: Are Lenders Willing To Help Consumers Through Rough Times?


It is a common misconception that lenders are evil corporations that don't care about us little guys. Without us little guys, the credit card companies would have absolutely nothing. So, even if they don't care about anything but the bottom line, it's in their best interest to help us out from time to time. As a matter of fact, many lenders have opened up financial hardship departments to provide a helping hand when needed. Learn more about credit card hardship programs here in an article I recently wrote for Top Finance Blog! 

Final Thoughts


When it comes to something so incredibly important as your credit score, it's important to believe nothing you hear without research. The truth is, if you are afraid to check your credit score, it's unlikely that you will build an excellent one. If you don't understand how closing a credit card may or may not change your score, it will be hard to manage reasonable amounts of debt and lines of credit. Finally, if you are afraid to ask your lender for assistance in the midst of hard times, you will find harder times to come in most financial hardship situations. This is why doing your research is so important!

About The Author, Joshua Rodriguez

This article was written by Joshua Rodriguez, proud owner and founder of CNA Finance and avid personal finance writer. This article was inspired by Joshua's most recent work, “How Long Does It Take To Improve Your Credit Score”. Join the discussion about credit scores or any personal finance topic of your choice on Google+!


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