Last time you checked you had a good credit score and, while some issues have come up, it takes a while for a credit score to go bad, right? Not at all. You can completely destroy your credit score in the matter of months. In fact, if you go six-months past due on a major bill (such as a credit card or loan) your account with be “charged off.” The only thing worse to your credit score is a bankruptcy. If you have several charge offs or accounts in collection your credit score will likely be completely ruined. So no, a bad credit score can happen quickly.
Bad Credit Score Takes Time
This is one of the more popular myths out there. You’ve probably heard the old myth of checking your credit actually hurts your credit score, so you shouldn’t do it. Fact of the matter is you can check your credit as often as you like without hurting your score. Just make sure you’re using credit scoring services and not mortgage lenders or other loan services to check your credit. Multiple financial lenders checking your credit on a constant basis will hurt your score.
Checking Credit Hurts Credit
The amount of money has an outside affect on your credit score, but it doesn’t directly hurt your score. In fact, income isn’t a factor at all when it comes to your credit score. In reality, the only connection money has with your credit score is how much you are approved for on your credit cards. If you make more money you’re likely approved for a higher credit ceiling, which means it takes more money to max out your credit. This is the only real impact on your score. Paying your bills on time is what affects your credit (and paying down your loans). In terms of actual score, money has no factor.
You Need to be Rich to Have Good Credit
There are actually several different credit scores. This is because there are different credit scoring models, each taking different aspects of your financial history into account a bit differently. Each model has different credit scores from individual credit bureaus, so you can actually have a large number of scores. Usually these scores are similar, although one might detect problems faster or hold onto these issues longer than others.
There is One Credit Score
It is possible, but typically it is not the case. You’ll receive a nice overview of your credit score, but the fact of the matter is monetary lenders have access to more comprehensive information, so their credit scores are likely going to be different and show more information than anything you see.
The Credit Score You Check is the Same As Your Lender
Whenever considering marriage, many people bring up the idea of credit scores combining. In fact, you may have seen “credit check” television commercials showing a married couple and how one person’s poor credit rating brought down all of their finances. That is not the case at all. You still have a separate credit history and credit report. Now, if you create joint accounts what happens in the joint account will affect your score (such as a joint credit card or checking account). However, your credit won’t go up or down based on your spouse.
Marriage Merges Credit Scores
There is a notion that a debit card will help build up your credit score, especially after bankruptcy. Sadly that does not happen. Now, some banks may require you to obtain a debit card first, monitor you and then approve you for a new credit card after going through a bankruptcy, but there is no actual impact on your credit score because there is no actual credit involved with the debit card.
A Debit Card Helps Build Good Credit
This is another one of the major myths around your credit score. It is actually illegal for an employer to check your credit score and use it against you. Now, they can check your credit report, but this is more to see if you owe money back to previous employers or if there is anything of this nature going on. That is the basis of their credit report check, so don’t worry if your report isn’t as high as you’d like.
Won’t Land a Job Because of Credit Score
No. Never do this. Closing a credit card will not improve your credit score. It actually hurts it. That is because you are doing away with an extended credit history. Plus, you can’t close the card off until there is zero balance, which means this is a good credit to have on file. Instead, just keep it open and have a periodic charge applied to it (like a monthly Netflix subscription or something just to keep it active).
Close Out the Credit Card After Paying it Off
True, a bankruptcy stays on file for seven years. However, as this negative information ages, it impacts your score less and less. In fact, if you work at building your report you’ll likely have a good score by the time it goes off.
It Takes Seven Years to Improve a Bad Score
Debt is never good. The idea of debt helping you out is a major myth. You do need credit offerings to build a credit score, but you don’t need to go in debt. Paying off the balance in full every month is much better than carrying a balance.
Debt is Good for Building Credit
Here’s the thing about this site. You do receive a free credit report, but you don’t receive your credit score, which is probably what you want to see.