Gossip About Your Credit Score That Just Isn't True

Someone call Regina George, we got some gossip to uncover. 

Unlike calculus or chemistry, most of us didn’t get a class to cover credit or credit scores in school, leading to a lot of misinformation out there. 

We know how hard it can be to figure out what’s real and what’s fake, so we’re going to spill the tea and break down all the gossip about your credit score that isn’t true.

Keep reading for the top 10 myths about your credit score:


#1. The More You Spend, the More Your Credit Score Goes Up

This couldn’t be farther from the truth.  Some might say that the more your spend, the more comfortable your bank is with giving you a higher limit. But, that’s a double-edged sword because the more you spend, the more likely you are to go into debt and be unable to make on time payments. Let’s make it clear: how much you spend has no effect on your credit score. 

So, what does affect your credit score? Keeping your credit utilization (how much of your available credit you’re using) low across all your loan accounts and paying your bill every month so you have a strong payment history. 

#2. Checking Your Credit Score Lowers It

Does checking your credit score lower your credit score? The answer is no. When you check your credit score, something called an “inquiry” goes onto your credit report and you’ve probably heard that inquiries are bad. 

The thing is, inquiries are only bad when they’re related to an application for a new line of credit, AKA a hard inquiry. It’s confusing, we know. 

Checking your credit score is a soft inquiry and monitoring your credit by checking your credit reports is actually a sign that you’re responsible. 

Inquiry, soft inquiry, hard inquiry…? Yeah, it’s like they make this stuff confusing on purpose. 

Let’s recap. 

Hard inquiry: When someone else (AKA a landlord or credit card company) checks your credit report for an application. This can negatively impact your credit score if you have many hard inquiries in a short period of time. 

Soft inquiry: When you check your credit score because you are #adulting. This has no effect on your credit score. Keep killing it! 


#3. Your Credit Score Can Be in the Thousands

Credit scores are 3 digit numbers which means they can’t be in the thousands. 

Well, what is the highest credit score you can have? VantageScore and FICO, two of the main companies that use scoring models to figure out your credit score, say the highest and perfect credit score is 850. 

Credit scores range from 300-850. No more, no less. So, if someone tells you they have a 900 or 1000 credit score, they’re lying to you and don’t know what they’re talking about. Please, don’t take any financial advice from them. 

#4. Your Credit Score Changes Every Day

While your credit score does update frequently, it’s not changing everyday. How often does your credit score change? It depends on how often lenders report information about your accounts to the credit bureaus. They usually do that every 30-45 days. 

Your credit score changes as your credit accounts age, if you apply for new lines of credit, if you’re late on payments, and if you pay off credit accounts. Those things take time. 

You don’t need to check your score every day or week even, but checking it once a month is a great way to stay on top of your credit. 

#5. Closing Credit Accounts is Good For Your Credit Score

Wrong! When you close a credit account, you decrease the amount of credit available to you which means your credit utilization ratio will likely go up and cause your credit score to go down. You’re deleting valuable credit history (for the record, deleting an account with an outstanding balance will not make the balance disappear). 

You should of course pay off your student loans, car loan, home loan, and credit card, but consider keeping your credit card accounts open when the credit card balance is paid off. That way, your credit utilization stays low and your credit score stays high. 


#6.Your Job and Income Affect Your Credit Score

Nope! Your income has no impact on your credit score. It doesn’t even show up on your credit report. 

All lenders care about is if you’ve paid everyone who has loaned you money back before. Of course, your job and income will impact your ability to pay back your loans and lenders likely will ask you about your income, but it doesn’t show up in your credit report. 


#7. You Can Pay to Get Your Credit Report Fixed

Please save your money. The companies that advertise fixing your credit score sound too good to be true because they are! Newsflash: they are ripping you off. The most they can do is help you remove inaccuracies from your credit report. 

But guess what? You can do that yourself by reaching out to your lender directly and saving your money in the process. There isn’t a way to fast track fixing your credit report to raise your credit score. That’s why it’s important to get things right the first time around as best as you can. 

#8. You Need Credit to Get Credit

This is actually true. You’re going to need some type of loan that is reported to credit bureaus monthly to improve your credit score. If you’re new to the whole credit thing though, there are ways around this. See if someone will add you as an authorized user on their account so that you can benefit from their hopefully high credit allowance and score. 

Instead of playing the risky “game” of opening a credit card when you may not have enough income to pay off your whole balance, try a debit card (cough, cough: EXTRA). We’re the first debit card that helps you build credit and avoid the whole secured card thing which often requires a deposit, charges up to 17% in interest, doesn’t really help you build credit, and requires a hard credit check to get the card. With us, there’s no deposit required, no interest rates, no credit checks, and we actually help you build your credit. 

#9. All Debt is Bad

All debt isn’t bad. Reckless debt like spending or living beyond your means is bad. But loans that helped you get an education or pay for your house are not bad; they’re actually a sign that you’re a responsible adult and borrower (even if thinking about how much you owe on them makes you sick to your stomach). 

Now, racking up $10,000 for a birthday vacation 3 years that you haven’t yet paid back? That’s bad debt. No doubt about it. 


#10. Your Credit Score Represents Your Worth As A Person

Is whoever told you this really your friend? Credit scores are used to decide how risky it is to lend you money. That’s all. 

If you have bad credit, it just means that you’re a risker bet when it comes to loaning money. But that doesn’t make you a bad person. Plus, it does not mean you are stuck with a bad credit score.  

If having a bad credit score is really weighing on your self-esteem though, they work on building your credit by paying your bills on time, paying off debts, and only applying for credit when you really need it. You’ll have a higher score in no time. 

Are you a detective? Because we just uncovered the truth on credit scores. 

With your new found knowledge we hope you are able to make more confident and smart decisions to build your credit — like checking out Extra ;)  


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