Everything revolves around your credit score from your credit card limit to buying a house. However, figuring out that magical number can be more complicated than it looks. There are so many opinions on what can affect your credit or what can’t. Some even assume that once you have low credit, you’ll never be able to bring back up. We are going to crack some of these myths, so you have the tools to build your credit more efficiently.

Myth: You can’t have credit if you don’t already have it.

The concept that you can’t build credit without already having it is a bit ridiculous. After all, we’re not all born with credit. Credit is determined by your identification, public records, account history, and inquiries. If you don’t have any financial history, then it can be difficult to apply for something large like a car loan without having a co-signer. To start building your credit on your own, you can request a secure credit card.

Myth: Once you have low credit you can never bring it back up.

Anything that can be done can be undone. That is true for anything including your credit. If you have bad credit, be smart about your finances. Pay on time. Look for better credit options. Do your research. Since your credit is based on your financial history, the bad credit will eventually fade, and your credit will rise.

Myth: Anything dealing with finance will affect your score, even looking up your credit score.

There are a lot of things that WON’T affect your credit score: looking up your score, your debit card, how much money you have in the bank, cash. The list can go on. If you pay everything with cash, you’re not developing a credit history. Looking up your credit score is like looking up your grade in a class. Your credit score is affected by anything dealing directly with taking out credit or loans and the process of paying that back.

Myth: Paying off your debt and closing those credit card accounts will improve your credit score.

This myth is correct and incorrect. While paying off a significant portion of your debt at once can improve your credit score, not using any of your available credit can also hurt you in the future. Think about your credit like a pond. Say your pond is 100 ft wide and only had 30 fish in it. It doesn’t seem like there’s a lot of fish. However, when you start shrinking the pond, it will appear as if there are more fish than there is water. The same goes for your credit. If you have $10,000 worth of credit and you use $3,000, then you are using 30% of it. That is good for your credit. Close one account, though, and that $3,000 makes up a larger percent of your credit and begins to lower your credit score.
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