Avoid common misconceptions when trying to raise your credit score
NerdWallet: 27% of Americans saw credit scores increase during the pandemic
InvestigateTV - According to a new report from NerdWallet, 61% of Americans plan to take measures to boost their credit score over the next 12 months,.
Credit Scores can make or break your finances. They help lenders decide whether you’re a good risk. A good score could mean access to a loan, housing or even a car, which is why it’s so important to understand what really impacts your score.
Kim Palmer, a personal finance expert with NerdWallet, explained the three biggest myths regarding credit scores:
Keeping a balance on your credit card helps your credit score
Rating: False
Palmer said you want to pay off your balance each month, if possible. She said a lower debt load improves your credit score and saves you from paying interest.
Close old credit cards that you no longer use
Rating: False
According to Palmer, credit lines with a long history help your credit score. She suggested keeping old cards open and put some recurring expense (that you pay off each month) on them to keep it active. This additional history could help boost your score.
Checking your credit score yourself lowers your score
Rating: False
Palmer said checking your own score is a “soft inquiry” that does not impact your score, plus it is good for you to know where you stand. “Hard inquiries”, like requests from lenders can temporarily lower your score.
NerdWallet has an article explaining credit scores and credit score ranges.
USA.gov has free resources on credit scores, including links to authorized free reports.
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