When you’re looking to improve your credit score, whether it’s to secure a better mortgage deal or simply access funds to get your finances back on track, you’ll be faced with a lot of advice. Unfortunately, not all of this is correct and there are a lot of common misconceptions and myths about what does and doesn’t affect your credit score.
Firstly, there isn’t one universal credit score, different Credit Referral Agencies (CRAs) have their own reports on individuals. You can find information about fixing your credit score online, but to get started make sure you don’t fall for these popular myths.
Taking Out Credit Damages Your Score
In fact, the opposite can be true. Making many applications for credit will result in hard searches appearing on your credit report, which can put off prospective lenders. However, borrowing through a credit card or other loan and meeting repayments on time is the simplest way to help build your credit score. It will only be damaged if you take out credit and fail to meet repayments.
Your Partner’s Score Has an Impact
For some reason, a lot of people think that their partner’s financial situation will affect their credit score. Marital status is not included on credit reports (despite 44% of people believing it was according to one study). Don’t worry if your partner has a poor credit score or history of missing payments, as it won’t impact on yours.
Checking Your Own Credit Score is Bad
If you want your credit score to improve quickly so you can apply with improved chances of acceptance for finance, it can be tempting to check your credit score on a daily basis. The good news is that you can give in to this temptation, checking your own score is not recorded on the report anywhere. Only hard checks made by banks and lenders when you apply for credit are stored on your report.
Don’t Close Any Bank Accounts
Closing bank accounts doesn’t have a negative impact either. When you’ve got a few accounts with little or no funds in them, it can be better to shut them. While closing a credit card or bank account with a good balance shouldn’t damage your score, it won’t help it either.
Better Job and Income Improves Things
Just because you have a higher income and lots of savings doesn’t mean you will have a better credit score. Bank balances don’t appear in your credit report and neither does income. You could have a lot of money but miss all payments and vice versa, so don’t worry about how much is in your account.
Avoid falling for these misconceptions and you can effectively build up a good credit score in the coming months and years.
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