Myths About Credit Scores You Need To Know

Vivan Rana Credit Guide Podcast Show

When talking about credit score, there are many myths or misconceptions that keep the borrower’s judgement clouded. A credit score is an important number when you plan to apply for a credit card or a new loan. Many times, your credit score is also fetched by insurance companies to decide your premium amount and/or coverage.

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1. Checking credit score lowers it

It's the most common myth. In fact, regularly monitoring your credit score helps you track the progress and take actions to increase the score when needed. Checking your credit score is considered a soft inquiry and does not hurt your credit score.

2. A good credit score means you are rich

false. As mentioned above, the credit score has nothing to do with your income. A credit score is used only to measure your credit risk. Your income may be low but if you have consistently paid your bills on time and have a good credit mix, you are considered a good credit risk.

3. Debit cards can help build a credit score

Purchasing anything via debit cards is just like paying in cash. You are not borrowing from a lender but only using the money that’s already in your bank account. This does not impact your credit score in any way.