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Your Credit Score: Myths and Reality Everyone has a credit score, even if you don’t know what it says about you. It’s worth being aware of how strong or weak your credit score because it will have an impact on many things. Anytime you want to access credit, get a phone contract or even get a job, your credit score could be consulted. Therefore, you should understand how these credit scores work.
Unfortunately, there are plenty of myths surrounding credit scores. Many people simply don’t know what they relate to and what has an impact on them. If you’re going to strengthen yours, you should know the differences between the myths and the reality. So, below you will find all the information you need.
Myth 1: The People in Your Household Affect Your Credit Score
The people you live with won’t have an impact on your individual credit score. So, even if you live with a partner who has a bad credit score, there is no reason to believe this will affect yours. Credit scores affect individuals, so you only need to worry about what you do. Don’t less this misconception change the way you live or use your money.
Myth 2: Having Lots of Credit Cards is Positive
You don’t need to have lots of credit cards to get a good credit score. This is a common belief among people. They assume that they need to prove that they are able to handle credit in order to get a good credit score. Although this does make some sense, it’s not necessary to take out lots of credit cards. For example, having one and using it sensibly can help your credit score. But if you take out many, your finances can start to get a bit messy. And then they have the opposite effect of the one you’d hoped for. Learn more about managing your credit score at bankrate.com/finance.
Myth 3: The Amount of Money You Have Affects Your Credit Score
Rich people with plenty of money in their bank can be just as badly affected by a bad credit score as anyone else. The amount of money sitting in your bank account has no direct impact at all on your credit score. So, it doesn’t matter how much or how little you have. Instead, you just need to make sure that you handle your money and credit in the right way. If you do that, there is no reason why you can’t have a better credit score than someone who has a lot more money than you do.
Myth 4: Lots of Past Borrowing is Bad for Your Credit Score
It’s not necessarily true that a history of borrowing lots of money is bad for your credit score. The quantity is not what’s important. What is important is how you cope with these loans and how you pay them back. This is what lenders and creditors will really care about. You could have taken out a huge amount of loans and paid them back swiftly and without hesitation. If that’s the case, it could actually be a good thing for your credit score because everyone can see that you’re able to pay back loans. That’s what creditors and lenders will be looking for.
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Myth 5: It’s Impossible to Borrow Money with a Bad Credit Score
When you apply for a loan or credit card, the creditor will look at your credit score. This happens in most cases. So, if your credit score is bad, they will simply choose to reject your application. However, these conventional lenders and creditors are not the only option in town. These days, there are plenty of lending alternatives that might be able to help you out depending on your needs. Credit unions can be used, as can guarantor loan providers. You can learn about taking out a payday loan at https://personalmoneystore.com. These loans can be useful for tiding you over between paychecks.
Myth 6: It’s Not Possible to Repair a Bad Credit Score
Some people assume that when they have a bad credit score, it’s on record for life. Luckily, that’s not how credit scores work at all. You can easily make changes to how you manage your finances. And this will then be reflected in your credit score, which should gradually improve. Your credit score focuses mainly on how you use credit and whether you make repayments on time. So, you will need to be sure that any loan repayments are paid before the deadline. In fact, all financial deadlines should be met if you want to prove that you’re reliable.
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