Year after year, credit score misconceptions hold people back when it comes to improving this all-important number. A healthy credit score can affect some major parts of life like getting a home loan, a car loan, and in some cases, it can even affect your ability to rent a home.
In this Credit Card Insider survey, respondents’ answers showcased what many Americans know about credit scores, and what they don’t.
“We actually repeated some of the questions that we asked in 2019 about people’s credit score misconceptions and every question that we repeated had even more people who were surveyed this time that chose the wrong answer,” says Nathan Grant, Senior Credit Industry Analyst, CreditCardInsider.com.
A major misconception revealed with this question: Does income have an impact on your credit score?
“Almost 66-percent of the respondents believed that it did, and that is a common misconception because when you go apply for new credit, they ask for your income,” says Grant.
So, your income could impact your line of credit, but it does not impact your credit score. You could have a healthy credit score at any income. What does impact your credit score are things like:
- Payment history
- Age of credit
- Credit utilization
Closing a credit card can hurt your credit score, though Grant says closing one could be fine if the card comes with a yearly fee, and you are not using it. However, if it doesn’t cost you anything, consider keeping it open, just remember to pay it off.
Most people also thought their credit scores are included in their credit report, and that is false. Though your credit report is used in the calculation of your credit score, they are two separate things.
You can go to annualcreditreport.com to get a look at your credit report. You can normally check them for free once a year, but since the pandemic all three credit bureaus are allowing consumers to check them once a week for now.
