Credit Score Misconceptions.

Do you know your credit score? Do you know the things that affect your credit score? For such an influential number, there is an abundance of misinformation available to vulnerable consumers. You could probably take a poll of everyone at Sarasota car dealer asking everyone the same question about credit scores and get a handful of answers. Even with that handful of answers, you do not know which one is correct! Below are a few common misconceptions about credit scores, and the correct information as well.

1) Your credit score is different based on who is calculating it.

All major credit bureaus use the same formula when calculating your score. Any difference that may occur is small and happens because not all lenders share information with all the credit bureaus. Typically, the middle score is used when calculating loans.

2) The more you shop around and your credit is checked, the more your score will be hurt.

It doesn’t matter if Toyota Boston runs your credit as well as four other dealerships, so long as the last place you go Peoria Volkswagen Dealer is within 30 days of where you started shopping. Your score may drop 5 points while shopping, but the credit agencies know that finding a loan takes time and comparison so you are granted a 30 day window.

3) Paying off all the old debt will fix your score instantly.

Sure, this would be true if the only thing determining your score was amount of debt. But actually, your score measures your performance of payment history. It does take time to improve your history of late payments, and paying off debt will help. Make sure you pay your bills on time and be patient; your score will go up!

4) You should close all inactive accounts.

This is one of the most tricky parts of credit. It is bad to have too many lines of credit available to you, but canceling them will only hurt your score. The credit bureau likes to see how much credit you have available to you compared to how much you are actually using. If you cancel those extra cards, it makes it look like you are maxed out with the remaining cards you have. If you absolutely can’t sleep at night and have to cancel an account, cancel the newest card because your oldest card has the most history.