Credit scores can be mysterious. Will my score improve if I cancel credit cards I no longer use? Do my on-time payments benefit my credit score? Can loans on which I cosign negatively influence my credit score? We can all benefit from the clarity of having common credit score myths debunked.
Here is the truth behind six common myths regarding credit scores:
Do credit scores matter? And if so, why?
Anytime you apply for an apartment, buy a car, take out a loan, apply for a credit card, or even buy a new phone, your credit rating comes into play. And without a good score, it is very difficult to accomplish any of these tasks.
A credit score is a combination of your current level of debt, previous debt and use of credit, the amount of time you have used credit, types of credit available, and your pursuit of new credit, with the greatest amount of emphasis on your previous and current debt.
In addition to avoiding the credit score myths mentioned above (don’t cancel that old credit card!), making debt and loan payments on time, limiting credit applications, and keeping outstanding debt minimal are all great ways to maintain good credit or improve bad credit.
Here are more tips on how to improve your credit score.