3 Lies You've Been Told About Credit Scores

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  • Don't neglect to check your credit report for fear of negative repercussions.
  • Don't assume your credit score will remain solid if you only make your minimum credit card payments.
  • Don't count on your income to give your credit score a boost.

The average consumer credit score was 715 in 2023, according to Experian. And your credit score may be higher or lower.

But do you understand what goes into your credit score, and how these numbers are calculated? And do you know what it takes to get your credit score from "good" to "excellent?"

Unfortunately, there's a lot of misinformation out there about credit scores. Here are a few lies you shouldn't buy into.

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1. Checking your credit report will hurt your credit score

It's not a given that all of the information on your credit report is correct. In fact, the Federal Trade Commission says that 20% of credit reports contain errors.

But the information on your credit report is used to establish your credit score. And so it's important to check your credit report on a regular basis to make sure it's accurate.

Now you may have heard that checking your credit report will result in a credit score ding. But that's not true at all.

When you apply for a loan or credit card and your lender or issuer does a hard inquiry on your credit report, that could cause a modest drop in your credit score -- somewhere in the ballpark of five to 10 points. So you do need to be careful not to apply for too many new loans or credit cards in short order.

But you shouldn't hesitate to pull a copy of your own credit report and review it for mistakes. Checking it yourself won't mean losing any credit score points. And although you're entitled to a free copy every week, checking it every three to four months should suffice.

2. Your credit score won't drop as long as you make your minimum credit card payments

You may be aware that paying bills late can damage your credit score. So you might assume that as long as you're making your minimum payments on your credit cards every month, you're okay, credit-score-wise.

But while making those minimums might help you establish a solid payment history, you could be driving your credit utilization ratio upward. That ratio measures the amount of available revolving credit you're using at once. And once it goes beyond 30%, your credit score could take a dive.

That's why it's important to pay more than the minimum due on your credit cards. Not only might it help your credit score, but it can save you a ton of money in interest charges.

3. The higher your income, the higher your credit score is apt to be

Having a higher income may make you more likely to get approved for a car loan or mortgage -- if you have decent credit to go along with it. But your income doesn't affect your actual credit score at all.

Your credit score is a measure of your credit history and activity. But it doesn't matter whether you earn $50,000 a year or $500,000 a year. If you pay your bills on time and keep your credit utilization low, chances are, your credit score will be pretty good. If you're late with bills and tend to carry large credit card balances, your score is likely to suffer. You also can't buy your way into a better credit score -- sorry.

It's important to understand what factors go into credit scores and what steps you can take to raise yours or keep it in good shape. Continue reading up on how credit scores work, so you're able to make sharp decisions that benefit you and open the door to plenty of borrowing opportunities.

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