Learn 5 myths about credit scores debunked, which I’ll be covering in this post. For some of us, credit scores can be a fairly touchy subject, especially if we’re trying to qualify for a mortgage to buy a home for our family.
The reality is that all of us are stuck dealing with this number that can dictate a lot about what we are actually allowed to do in terms of personal finance. If you have been worried sick about your credit lately, you aren’t alone. This is why we wanted to help you feel better by providing you by exposing the truth regarding 5 myths about credit scores.
A Bankruptcy Will Ruin Your Credit
A lot of people spend their time doing anything and everything that they can to avoid filing for bankruptcy. There is this common myth that bankruptcy will ruin your credit completely, but that isn’t true for most people. In reality, a lot of people see an increase in their overall score after bankruptcy.
You Can’t Fix A Low Credit Score
Many people get discouraged by their bad credit scores and feel branded for life. Though a low credit score can be a problem at the moment, it is quite possible to get your credit score back up. Focusing on good payments, keeping debt low, and paying off loans can boost your credit by a lot over time.
All Debt Is Bad
It is very common for credit cards to be painted in a negative light. In reality, not all debt is bad. Debt is a big part of building your credit up. While too much is bad, having low debt amounts on active lines of credit can give your credit score a quick boost. Most lenders would rather see average or low credit than no credit at all.
Pre-Approved Means Approved
So many of us receive pre-approved letters based on our credit scores. Though it can be tempting to look at these letters and assume it means you’re doing alright, the reality is that pre-approved does not mean approved. When you contact these companies, they will run your credit and there is no guarantee that you will get the card. Applying for these offers can do more harm than good.
People With Bad Credit Can’t Take Out Loans
People think that if they have bad credit, they have no options. This couldn’t be further from the truth. While some companies do only offer to people with a certain credit score, not everyone does this. You can get approved for a loan with bad credit. However, it is up to you to decide if the decision is worth it. Be smart about the loans you do try to get in order to improve your credit score. Only commit to something with payments you can comfortably cover and don’t overextend yourself. The idea is to improve your situation, not make it worse.
Don’t let your credit score keep you up at night. The credit score that we all rely on is a constantly changing number. You aren’t stuck with it for life and you can make improvements. Instead of staring at your score, look for active ways to improve your credit score over time. You will be glad that you did when you start to see the number rise. Think of your credit score like a temperature check. It tells you about your current situation, but it can change a lot in the future. You are more than your most recent financial history, so act accordingly.