Most people worry about what will ruin their credit history and how to improve their credit score. However there are some things that will not impact your score at all. Read below to debunk some common low credit score myths!
- Closing Credit Cards For Good
If you’re planning to downsize on your credit card portfolio then ensure to leave about 2-3 credit cards and close the ones you just don’t use. Refer to the credit card payoff calculator to help you pay down the debt faster. This will not impact your score and will actually give you higher chance of increasing your score because of less “open” credit. After closing some of your credit cards, you will have less open credit meaning you will decrease your risk of going into greater debt. Open credit means having credit that is open for you to use.
- Paying The Full Balance On A Credit Card
Paying off your credit card in full is absolutely ok. The credit card company is not fishing for your interest payments. If you can afford to pay in full then do so. You will create a trusting relationship with your credit card company and you’ll increase your chances of receiving special offers and increasing your credit limit in the future. Paying your card in full will build trust and long term relationship with the lender.
- Having Various Credit Products
Having a loan, a mortgage, a few credit cards and maybe a car lease to top it all off is okay. It shows you can handle different kinds of payments and are able to juggle different credit products. What’s not ok is applying for credit too often because with every credit application there is a credit history check, having too many applications will decrease your score.
- Accepting Pre-Approvals
If you’ve been pre-approved for a credit card or a line of credit it’s ok to accept it (but only if you need it). A pre-approval is a soft application (vs. a hard full credit application). Soft application do not impact your credit score. Many think that a pre-approval will lower their credit score, however this is not so. Only hard applications – requiring to fill out an application form and submit income verification may impact your score.
- Using Credit For Purchases
Many people stay away from using their credit card or line of credit at all. This may be out of fear that they will become dependent on the credit and start using it all the time. This fear has nothing to do with credit and has to do with self-control. If you are capable of controlling your actions and thoughts then you’re capable of using your credit products responsibly. Without using the credit products you can’t build up your credit history. It’s ok to use your credit card for larger purchases, so long as you don’t use it too often and become reliant on it.
The above actions will NOT ruin or decrease your credit score. It’s recommended to check your credit score once a year to ensure all the information is correct and keep track of where you stand.