Credit Card Myths Uncovered

Advice can be helpful in many cases, but following misguided or erroneous advice, even when well-intended, can have a devastating impact. The same is true of advice on bolstering your credit score. Unfortunately, there is a variety of mistaken credit advice floating around that can actually make yours worse. Here are some common myths that you should disregard when trying to get a better credit score.

Inquiries Hurt

Too many inquiries can cause your score to fall slightly, but the idea that score inquiries hurt is overblown. Indeed, with many scoring types, inquiries made within a certain period are actually considered to be a single one. There are good reasons for this. Say you want to buy a car. The dealer will often look to several banks for financing, and it would be wrong for you to be penalized for it. Furthermore, if you have a credit account, the company will regularly review your credit status. This method, called a “soft pull”, doesn’t affect your score. Another example of a “soft pull” is inquiring about your own credit score, so don’t be afraid to check.

Debt = Good Score

This claim is patently untrue. If you have more debt than credit, your overall credit score will take a big hit. Your repayment habits also impact this. Repaying the full balance every month doesn’t help. It’s much more important to make regular payments on time. In fact, just by being dutiful with your payment schedule, you can achieve an excellent score with minimal or no debt.

Debit Doesn’t Impact Credit

Debit card activity isn’t turned over to credit companies, but using one does have an effect. If your bank account is protected from overdrafts by a line of credit, it can have either a positive or negative impact. If you don’t make any payments on the loan, or if you max it out, your score will suffer. However, if you use this carefully, it can improve your credit standing. You should also carefully look over your account details regularly. It’s common for people to be unaware that they’ve gone above their line of credit.

Co-Signing Doesn’t Matter

When you sign onto another person’s loan and it’s significant enough to upset your income to debt balance, your credit is circling the drain. This can cause you to be denied for any future loans you may need. The lending company might accept a note claiming that you’re not paying on the loan, or they might not. Either way, you’ll still be considered responsible for whatever you sign your name on.

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