MYTH: CHECKING YOUR CREDIT SCORE WILL HURT IT
Although the survey shows nearly 2 in 5 Americans (39%) think checking their own credit score can cause it to drop, that’s not the case. The confusion might come from the two types of credit checks, called inquiries. Your score is unaffected when you check it yourself or when a lender checks it to pre-qualify you for card offers and other marketing purposes. Those are called soft inquiries. The other type, a hard inquiry, happens when a lender checks your credit because you’ve applied for a new line of credit. A hard inquiry can drop your score a few points, but the effect is only temporary. Checking your own score regularly lets you track your credit and spot signs of trouble early. MYTH: YOUR CREDIT SCORE IS ON YOUR CREDIT REPORT The survey findings reveal that about 8 in 10 Americans (82%) incorrectly believe that their credit report includes a credit score. Those are two different tools, although they are closely related. Your credit report contains details about your past credit use and other personal and financial information. Your credit score, on the other hand, is based on the data in your credit report. That score, usually on a scale from 300 to 850, helps potential lenders assess the risk involved in granting you credit. You have access to both your: • Credit report: You’re entitled to a free credit report weekly from each of the three major credit bureaus, and using AnnualCreditReport.com is the best way to request them. Reading your credit reports and disputing errors are good financial habits. • Credit score: Many personal finance and banking websites offer a free credit score that you can use to monitor your progress.
MYTH: CARRYING A SMALL BALANCE ON CREDIT CARDS HELPS YOUR SCORE
Nearly half of Americans (47%) think that carrying a small credit card balance is better for their credit than paying it off each month, according to the survey. But all that does is cost you in interest. Paying off your balance in full also can help keep your debt load from creeping up higher than you can afford. If you’re interested in building your score, try this approach instead: Make a few smaller payments each month or time payments with a paycheck or another influx of cash. Continually lowering card balances instead of waiting for the monthly bill helps keep your credit utilization low, which has a big influence on scores.
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