When it comes to credit scores, there is a sea of information out there. Unfortunately, most credit card users are still holding on to useless myths about credit score especially regarding how to fix bad credit fast. Take a read to know the truth.
Myth #1: Being free of debt means a good credit score
The amount of debt you owe is one of the main factors of a credit score, seconding the payment history. If you settle your loans in bad credit, it takes a long time to regain a good score. You might also be debt-free after bankruptcy- something that will hamper your credit score.
Myth #2: bad credit status stays forever
A poor credit score can remain on your card for good if you keep on making poor financial decisions. To avoid being scooped up in this position, stop maxing out your cards, don’t let the bills to go to collection, and pay your dues in a timely manner. Proper management of credit is the best way to repair credit fast.
Myth #3: You cannot be approved for anything with bad credit
Bad credit will hamper your efforts of getting approved for loans and other financial services. This is the only factor the lenders use when assessing the creditworthiness of their clients. Your income level and debt will come into play as well. But you can still be approved with poor credit score. However, you will need t pay a higher security deposit as well as interest rate in case of a loan.
Myth #4: You should take loans more often to fix bad credit fast
You don’t need to be in debt to improve your credit score. All you need is to use credit products which can be as easy as opening a new account and pay off the balances in due time. Never create more debts that your financial capabilities to build credit.
Myth #5: It takes years to get bad credit
If you didn’t know, you can ruin your credit score in a few months time. If you go for six months without paying your bills and debts, you get a charge-off on your credit card. If you continue to receive charge-offs, you will ruin your credit completely.
Myth #6: Checking your credit often ruins the score
You cannot hurt your credit as long as you use the right channels to get credit reports. Use reputable scoring companies to check credit as opposed to mortgage lenders.
Myth #7: You need a huge sum of money to maintain a good score
The amount of money on your credit card has insignificant effects on your credit. Income is not a direct factor of FICO scores. The things that matter the most include bill payment habits credit utilization, and credit mix. Even if you have millions in your account, late payments could hurt your scores significantly.
Myth #8 Prepaid and debit cards can improve the score
If you hope to repair credit fast with these cards, you will be disappointed since they don’t have the credit aspect. How you use them is not used in the determination of credit score. The right cards to build credit are credit cards and loan products.
Now that you know the truth, go ahead and build better credit scores to improve your life.