When you consider improving your credit, there is a certain hearsay that starts developing around you. It is extremely important that you take every step cautiously as you are dealing with your financial situation.
If you succumb to wrong myths, you may end up deteriorating your credit score. Let’s take a glance at these 5 myths that may hurt your credit score.
1. Paying off the debt eliminates negative items
Getting rid of overdue debt is wise but it does not necessarily remove the negative credit or the late payments off your credit report as soon as you repay the account.
Slow or late reimbursement on the credit card will bring your credit score down and the only way out is re-establishing positive credit. As your credit card rates your in-time payments positively, it is vital to do so if your credit history has been bleak.
2. Settling your credit card balance completely as fast as you can is prudent
It’s untrue that in order to receive the best credit, you need to keep your balance at $0 at all times. Equifax testifies that people with the best credit scores possess multiple credit cards owing small balances.
However, that is not to say that one should stop making payments in full. Keeping your balances clean is a great way to save money and build credit.
3. Avoiding credit cards is the way to good credit
As discussed above, you must use credit in order to produce a good score. However, there are ways to do it without a credit card, for instance, auto and mortgage loans. But, credit cards are the most convenient way to prove your accountability with credit. If you refrain from using credit cards altogether, your credit report will constitute fewer elements, therefore, you will have a weak ‘credit mix’ and a lower score.
4. Debit outshines credit at the checkout register
Using debit for personal transactions will not benefit your credit score in any way. Whereas, if you utilize credit appropriately, it will reflect on your credit report.
Many individuals miss this opportunity thinking that debit is safer than credit. Historically, it may have been true that debit cards are more secure at the point of sale but with the advent of chip-and-PIN, credit cards are as secured as debit cards. Hence, this should not come up as a concern anymore when it comes to selecting the medium of payment.
5. A low credit score blocks you from receiving credit
If you think that a low credit score is stopping you from getting accepted for credit, you should seek a secured credit card from your bank or a credit institution like Canada Auto Experts, that can qualify you for a card regardless of your credit history.
It is ‘secured’ as it works with the amount you deposit into an account against which the funds are drawn and which is usually your credit limit. Remember to confirm that your secured credit card reports your activities to the credit bureaus so you are sure that you are establishing credit by using it and making payments. Typically, after a year you can graduate to an unsecured credit card by having the initial deposit returned to you.
Credit cards are certainly instrumental in developing a good credit timeline, however, there are other ways you can make your way up to an excellent credit score faster. Auto-financing can help you achieve your dream credit in less time. Talk to one of our credit specialists at +1855-550-5565 or click here to apply now!