Common Credit Card Myths that Aren’t True

There are so many myths out there, about credit. Some of them are true and some are not true at all. If you want to find out more about them then simply take a look below.

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Viewing your Credit will Lower your Score   

So many people believe that if they check their score, they will lower it. This is not the case at all. Your score will not be affected when you check your score, and it doesn’t even matter what sites you use either. When you apply for a loan and your creditor happens to check your score, this does however affect your credit. 10% of your score is actually determined by new credit changes, whether it is a newly opened account or the amount of hard checks you have had done in the last year or so.  Enquiries will stay on your record for two years, but just the ones that you have applied for in the last year will show up on your score. There isn’t a set amount that your score will drop when a hard check is made, but usually one or two checks won’t come into account at all. If you are concerned about your score then check out these no credit check installment loans.

Your Debt to Income Ratio will Impact your Score

Your debt to income ratio will not affect your score at all. Your debt will include your credit card payments, your mortgage and even your car payments. The credit bureaus do not have access to any kind of income you have and the DTI ratio will only be used by mortgage lenders. They will use this to determine what kind of mortgage you could get. You should also keep an eye on your credit utilisation as well. This ratio is the amount of credit you have. Your credit card debt will be compared to your credit limit, and this will affect your score.

The More Debt You Have, the Lower your Score will Be

Not all debt is equal. If you have a mortgage which is $300,000 then this is good debt. A home is a very good investment. If you have $10,000 credit card debt then this will be bad debt however. It’s important to know that the amount of credit card debt that you have will impact your score in a huge way. Keep your balances below 15% on your credit card if you want to maintain a high score. It’s better to have several credit cards which are not well utilised when compared to having a single credit card that you use most of the limit on. This may sound strange, but it is most certainly true.

Paying Off Collections Raises Your Score

When you pay a collection account and when this is reported on your score, your score will take a hit. If you pay off the account or if you settle it then the negative account won’t be deleted however. A collection is still a collection, whether you have paid it or not. Unless you have it removed from your account, it will continue to bring your score down. 

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