The realm of credit and credit scores can be confusing to many. Financial literacy is hard to come by and for the most part, difficult to understand. It is important that we all perceive the significance of what hurts and helps our creditworthiness. Here are a few of the most common credit myths debunked:
Myth #1: Checking your credit is bad for your credit score
Let’s be clear, checking your own credit has no impact on your credit score. However, applying for a loan will typically have some effect. You should be checking your credit score regularly. Should you happen to see a significant dip in your score knowing you did not recently apply for credit, then there may be some foul play at hand. Identity theft is real and it is imperative that you routinely check the status of your credit.
Myth #2: Marital status is reflected on credit reports
Research shows that at least 44% of consumers have no knowledge of the Equal Credit Opportunity Act (ECOA) – regulations that forbid a creditor’s scoring system to use certain characteristics as factors. These characteristics include:
- Marital status
- National origin
Although marital status is not reflected on your credit report, you must remember that both the credit scores of you and your spouse are taken into account when making joint purchases or applying for loans together.
Myth #3: Late payments on utility bills are reflected on credit reports
Truth be told, most utility companies opt to only report late payments or payments that have gone to collections, while other companies report both on-time and late payments. Do your best to make on-time payments and pay off any outstanding bills to avoid the damaging effects those may have on your credit score.
The simple truth
You are in control of your credit score. Do your research, do your best to make on-time payments, and use a budget to ensure you are keeping track of your finances to avoid overspending.