The TRUTH About Credit Scores Banks DON’T Want You To Know

The saying that you are just a number pretty much holds true when it comes to the world of credit.

As soon as each of us officially takes on the responsibility of having some form of loan or debt, we are all entered into a database that tracks every single credit-related action that can be tracked electronically.

Yes, your every action when it comes to debt payment responsibilities and actions are tracked by credit bureaus and they give you a score that ranges between 300 to 850 points.

This is your credit score.

If you plan to buy a car, a house, land, get a loan, or apply for credit cards, it is of prime importance that you take care of your credit score.

Your credit score helps lenders decide on your level of riskiness or trustworthiness in paying a loan.

Hence, it is important for you to know the truth about how your credit-related activities impact your credit score.

3. Checking your credit score does not lower your credit score.

Contrary to what most people have heard, checking your own credit score does not lower your credit score at all.

If you check your credit from a legit source such as using the credit bureaus themselves, then you won’t get dinged.

However, actions such as applying for a credit card indeed temporarily dings your credit score.

If you want to check your credit score for free, you can contact the top 3 major credit bureaus or use some of the benefits and features provided by some credit cards such as Discover or Chase.

2. Carrying a balance on your credit card does not boost your credit score.

When I was younger, I was told to keep balances on my credit cards as I was told leaving balances was important to boost my credit score.

It turns out that this info is absolutely not true.

To start with, having a balance on your card means you will be paying interest. That is not good.

In addition, when you have balances on your account, this will affect your credit card utilization rate.

In general, the higher your credit balance, the higher your utilization rate.

Bottomline is … a high utilization rate can negatively impact your credit score.

So if you are carrying a high balance on your credit card, try to reduce this to improve your credit score.

1. Your credit report is entirely different from your credit score.

Contrary to what most people think, these two are entirely different but are definitely highly related.

Your credit report is a detailed record of your credit history.

This includes your current and past credit accounts, debt collection accounts, how often you apply for credit, and any financial-related cases that you may have been a part of.

Your credit score, on the other hand, is a numerical representation of all these factors.

If you maintain good credit standing and have a clean credit history, then this will be reflected on your credit score.

Both your credit report and your credit score are maintained and monitored by the three major credit bureaus — Equifax, Experian, and TransUnion.

Important Tip: Make sure that you monitor your credit scores. In fact, you are legally entitled to a free copy of your annual credit report from the above-mentioned credit bureaus.

Some people try to request for their credit scores from each one of the credit bureaus but not all at the same time.

For example, they initially ask for a report from Equifax. After four months, they ask for a report from Experian. Then after another four months, they then ask for a report from TransUnion.

If you have all the time and the patience to do this, then by all means, go for it. It may not be the most efficient use of your time but if that is what rocks your boat, then go ahead and do it.

Here’s an insider tip for you. Sign up with a credit score monitoring service. You’ll have access to all your credit scores whenever you want to check on them. Some services even provide access to your FICO score, offer dark web monitoring, and $1 million in identity theft protection.

By doing so, you may be able to catch any errors or inaccuracies on a timely manner and dispute them.

This will help you have a more accurate credit history with the 3 gods of the credit world.

And just an FYI, a credit score of 760 or above will likely qualify you for the best deals on everything.