We researched the top 10 most common credit score myths and have explained them below so you can start to improve your credit score today. We have even added a couple of ways that Birchwood Credit works to debunk these myths, making it even easier to become more knowledgeable about your credit.
Your credit score is something that will follow you around as long as you’re alive and making purchases, especially large ticket item purchases such as buying a house or a car. For this reason, it’s incredibly important to make sure you know the myths of credit scores and do your best to keep your credit in the best shape possible.
If your credit isn’t where you want it to be, that’s okay! These myths will help you become more knowledgeable about credit scores and credit cards going forward, which in turn, can help you improve your financial health!
1. Checking my credit score will lower it.
False. This is one of the most commonly known credit score myths. What’s important to know is checking your credit score will not have a negative impact on it. However, if you need to get your credit score checked for a line of credit by a third party, your credit score can be impacted by them asking for your report. For this reason, we advise you to limit the number of credit checks you do get, to avoid hurting your credit score, even if it is minimal.
Birchwood Credit Debunks “Checking my credit score will lower it”
At Birchwood Credit, we can check your credit with our Secure Credit Check with little impact on your credit score. If you are trying to improve your credit, the first step is knowing where your score currently stands. We offer a way to safely check your credit score so you can begin working toward your financial goals.
2. Closing a credit card will affect your credit score.
False. Your credit card doesn’t have a positive or negative impact on your credit score. If you kept that credit card in good standing, consistently paid it off and maintained it as a positive account, closing the card does not hurt or benefit you. If you’re closing your credit card which is in negative standing, it also does not have much of an impact. The history coming with that card will stay with you for 6 years, even after you have closed it.
3. Your income impacts your credit score.
False. regardless of how well paying your job may or may not be, it does not have a positive nor a negative impact on your credit score. Your credit score is determined by how well you pay your bills and how much you owe. Of course, the more money you have, the easier it is to pay off your bills consistently and on time.
4. If you have a good credit score it means you’re rich.
False. Similar to the myth outlined above, having an excess of money or making a lot of money does not guarantee a good credit score. If you have a good credit score then you have been consistently paying off bills or loans on time, which doesn’t mean you necessarily have a ton of money in your bank account.
Birchwood Credit Debunks “If you have a good credit score it means you’re rich”
At Birchwood Credit, we believe that you can build a good credit score regardless of how high your income may be. Even if you have a low credit score to begin with, that is okay! We will help you to gradually increase your credit score by giving you the resources you need. This is what we do when you buy a car with Birchwood Credit. We create an affordable payment plan for you so you can build your credit while still staying within your budget.
5. Carrying a balance on your credit card can boost your score.
False. Carry a balance has no opportunity to help your credit score, it will only lower it. Keeping a balance on your credit card will only result in it appearing like you’re refusing to pay it and will also result in you having to pay interest. Credit reports want to see individuals paying back their credit cards when the payment is due, in full. The minimum amount you’re allowed to pay will not be able to move the credit score up.
6. Getting married will affect your credit score based on your partner.
False. Your credit score is yours and yours alone. Even when you get married, your partner’s credit cannot negatively or positively affect your credit score. However, when it comes to making large, joint purchases, both you and your partner’s credit score will be looked at if you’ll be receiving a loan, which then may affect how much you’ll receive, or if you will get approved for the loan.
7. Using debit cards can help your credit score.
False. Debit cards are not connected to credit at all, as when you spend money using a debit card, it’s coming directly from your chequing account (in other words, your own funds). If you’re able to consistently pay off your credit card bill, it can be better to pay for everyday purchases like gas, food and other necessities using your credit card. Credit card companies like to see consistent bills and payments. It’s a small way for you to build credit – just make sure you always pay your bills in full on time.
8. Your bad credit score will last forever.
False. A bad credit score can definitely improve with time, as long as you’re doing the right things. If you keep doing the things that got you into a bad credit score such as not paying your bills on time, then of course there will be no way for it to improve! When you begin to start paying their bills on time and having multiple lines of credit that are consistently paid off and you’ll eventually start to see your credit score rise, and you will become more financially healthy.
Birchwood Credit Debunks “Your bad credit score will last forever”
Did you know that purchases, especially big ones that require a loan, can actually help improve your credit score? Well, it’s true! By purchasing a car with Birchwood Credit, and paying off your loan following the monthly payment plan we create for you, you will repair your credit score in time. As long as you are also paying your other bills on time, having a loan that you are also paying off simultaneously will help improve your credit score substantially.
9. Employers can check my credit score.
False. It’s illegal for an employer to check your credit score as a way to screen you as an applicant. It’s also completely irrelevant for an employer to have that information, as the way one chooses to spend their money or any debts they may have is not important for their employer to know. However, if your employer was to provide you with a loan, then they may be eligible to know your credit score. Regardless, in terms of being a hirable candidate for a job opening, they cannot check your credit score and use that as a reason to not hire you.
10. Bad credit means you’ll never be approved for anything.
False. Bad credit can make it harder to get approved but it’s not impossible. Lenders consider other factors when determining if you are eligible for a loan or evaluating your creditworthiness. The downside is that you may have to pay a higher interest rate or pay a security deposit to ensure that they are comfortable with loaning you money, as you would be considered more at risk.
Birchwood Credit Debunks “Bad credit means you’ll never be approved for anything”
Birchwood credit approves all credit types! We believe in looking past that three-digit number that other companies may use to inhibit you from receiving a loan or make you pay a substantially higher interest rate. We look at your entire financial situation when making an approval.
Credit Card Myths Debunked
We know that learning about credit scores is a long journey and mistakes are likely to be made along the way. Everyone has been there, mistakes are what help you to learn and grow, so don’t get discouraged if you have made some or if you believed these myths in the past! We hope this helps and can’t wait for your credit score to start improving.
If you ever have questions about your own personal situation and want to talk to someone about your credit score and options, feel free to contact us. Birchwood Credit is here to help!