01 May Unveiling the Truth About Your Credit Score: 3 Common Myths Debunked!
Credit scores are often seen as the holy grail of financial wellness, but understanding how they’re calculated can be a mystery to many. According to a survey by CompareCards by LendingTree, a staggering 37% of consumers admitted they had “no idea” how their credit score was determined. This lack of clarity allows myths about credit scores to thrive, potentially hindering individuals from taking the necessary steps to improve their financial standing.
So, let’s dive into three common myths surrounding credit scores and separate fact from fiction:
Myth #1: Leaving a small balance on your credit card helps your score.
Reality: Contrary to popular belief, carrying a small balance won’t give your credit score a boost. While it may not harm your score significantly, it could result in unnecessary interest payments. The best practice? Pay your credit card statement in full every month to maintain a healthy score and save on interest costs.
Myth #2: Having a lot of credit cards is bad for your credit score.
Reality: Having multiple credit cards isn’t necessarily detrimental to your credit score. In fact, it can increase your overall credit limit, potentially lowering your credit utilization ratio. However, be mindful of opening several cards within a short period, as this could temporarily impact your score.
Myth #3: Checking your credit score or report hurts your score.
Reality: Fear not! Checking your own credit score or report won’t harm your score. Platforms like Credit Karma allow you to monitor your credit without any negative impact. Only official credit inquiries made by lenders during credit applications have a temporary effect on your score. Did you know that if you are a member of Level Coaching, you get credit score monitoring included as part of your program??
Understanding these myths is crucial for navigating your credit journey effectively. Remember, your credit score is just one piece of the financial puzzle, and at Level Coaching, we’re here to help you unlock your financial potential.
Stay tuned for more tips and insights to empower your financial journey!