The media, newspapers, internet are full of information, but sadly, much of the information concerning credit is inaccurate. Let’s check out some common credit myths:
Credit Myth: “You share a credit score with your spouse.” (Now, you might think that sounds absurd but I assure you it’s far more widespread than you think.) Your spouse and your credit report and scores are looked at individually. If you have joint accounts, they’ll show up on both your credit reports. If you get an authorized user account for your spouse, that’ll also show up on your report. However, if none of your accounts are joint, and you don’t have any authorized user accounts, there will be nothing that will affect your score for one another.
Credit Myth: “Your credit score only counts when you’re looking to borrow money.” Huge Myth! Your credit score, right now, is looked at for almost everything you do. Increasingly, when you’re applying for a job, they look at your credit score. When you’re applying for auto insurance, homeowner’s insurance, life insurance, they look at your credit score, they look at your credit history. That’s why it’s so important to clean your credit up. Make sure that your credit’s reporting accurate information. If you have derogatory credit that’s truly yours, you work to rebuild credit. And this is the message that you need to get out to your consumers, and why some of this is so important.
Credit Myth: “Always paying your credit card balance in full will give you the best credit.” The problem is if you have no balance, if you leave your credit card with no balance, you’ll also have no payment history. You’ll want to leave a little bit of balance on your credit card every month, to show that you can pay on time. Don’t just pay off a balance and leave it as a zero-balance account ongoing, because after six months it’s typically looked at as an inactive account, which gives you really no major benefits. This is counter-intuitive, so a lot of people who are otherwise quite financially literate will still cling to this particular myth. In fact, if you use the account every few months, and leave a very small balance on it, then that approach will help you.
A good way to look at it is if you have no balance, then they can’t really look at your payment history. If you owe ten dollars and pay a dollar a month, well then, all of a sudden you’re showing that you do get a bill. The way FCRA looks at it, if you have no balance, they don’t know whether or not you can pay it, because you’re not getting a bill. You have no obligation to pay. So that’s a strong part of it, and so you should always keep a very, very small balance, as small as you possibly can, is what you’re advising your consumers to keep on their credit cards.
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