There are all kinds of numbers that we need to be aware of. Many of these are unchanging, such as our social security, bank account, and phone numbers. However, one that’s rather flexible is your credit score. You need to have an active awareness of your credit score in order to know about your ability to stay financially viable for things like home loans. Some get the idea that checking credit scores is not beneficial. However, you need to be aware of how false these notions are. Here are four common misconceptions about checking your credit score.
1. Your credit score isn’t flexible
Suppose you checked your credit score last year. Maybe it was really quite impressive (such as 800 or higher). That’s splendid, but you shouldn’t think for a minute that your score is in the exact same place as it was before. Even if you’ve been doing everything properly, such as making your payments on time and eliminating debt, you should still be checking your credit score on a regular basis. There might be fraud going on against you that you aren’t aware of until you see how low your credit score has gone. It’s important that you set a regular schedule for checking your credit score. You might also be pleasantly surprised by seeing how it spikes up through repeated good use of your credit.
2. Checking your credit score will hurt your credit
It seems counter-intuitive: checking your credit score has a negative effect on your credit score. After all, what would be the point of having a credit score if there was a disadvantage to checking it? Thankfully, this idea isn’t true, at least not entirely. There are two kinds of credit score reports: hard pulls and soft pulls. Hard pulls are more intense and go further in-depth. As a result, your FICO score (one type of credit score) might be lowered a bit. The decrease will be minimal and not affect you for more than a year. On the other hand, soft pulls are much lighter. They’ll give you the most important part, which is your credit score. This alone can give you an idea of how your credit is doing, without fear of it being diminished.
3. Only credit cards affect your credit score
While credit cards certainly have a bearing on your credit score (they’re called credit cards, after all), they are by no means the end of the story. There are all kinds of ways to establish and consequently, affect your credit positively or negatively besides credit scores. You need to have a positive track record of paying back money owed in order to have a good credit score. Think of any institution that you owe money to. This could be a credit card company, a bank (for loans), or your local electrical company. If you are delinquent with any of these accounts, it could affect your credit score. While having debt alone isn’t enough to give you a bad credit score, not making payments on time is going to affect your score for the worst.
4. Your score isn’t important
If the idea of checking your credit score elicits nothing more than a shrug, you’re not doing things properly when it comes to adulthood responsibilities. You need to make sure you that you are as aware of your finances as possible. This doesn’t mean you should be obsessively checking your credit score at every second of every day. However, you should be checking it on at least a monthly basis. You need to be aware of any trends or any suspicious financial activity. It’s definitely not much fun to try to build up a credit score that has crashed after many months of you not keeping up with it.Read More