Having good credit is essential for getting the best loan rates, securing a competitive mortgage, and can even help you land your next job. When it comes to your credit report, however, there are plenty of myths surrounding just how important this score truly is. Put your financial future first by meeting with a financial counselor and learning the truth behind these common credit myths:
Credit Myth #1: Making a Credit Inquiry Hurts Your Credit
Though it is never a good idea to make excessive inquiries, allowing a lender or financial institution to occasionally pull your credit will not likely have a noticeable impact on your score. Additionally, if you monitor your credit report yourself, personal inquiries generally do not have negative impact on your score.
Credit Myth #2: Paying Your Utility Bills on Time Builds Credit
Unfortunately, paying your utility and cell phone bills on time does not affect your overall credit score. Although your cable company, phone company, and gas company will likely check your credit, they will only report you to a credit agency if you fail to pay. When it comes to phone and utility bills, consumers can only hurt their credit, not increase their credit scores.
Credit Myth #3: Poor Credit Is Eliminated After Seven Years
One of the most pervasive myths about bad credit is that negative aspects come off your credit report after seven years. Although bankruptcies and their associated delinquencies may fall off over time, unpaid credit items will stay on your credit report forever. If anyone promises to remove unpaid debts from your credit report, it is most likely a Credit Repair Scam.