Credit Score ArticlesWhat You Don't Know About Your Credit Score May Hurt YouTip! An individual's race, sex, age, level of education, or marital status has no bearing on a credit score, nor does the fact that an application for credit was previously turned down. Our life revolves around our credit score. Our credit score is partially responsible for the interest rates we pay for mortgages, auto loans and credit cards. It's even used to determine our insurance premiums, and whether or not we get hired for our dream job. Yet, according to a survey released in 2005 by Fair Isaac Corporation almost 50% of people surveyed had no idea what factors were used to determine their credit score. More than 45% of those surveyed thought a higher income would increase their credit score. A higher income may increase a consumers ability to pay on time, but income has no direct correlation to their credit score. Here are some other myths about your credit score. 1. My credit score will drop if I check my credit - Fortunately, this is a myth. If you check your own credit report it doesn't harm your credit at all. 2. My credit score will drop if multiple lenders check my credit- If you contact multiple mortgage lenders shopping for the best interest rate within a couple of week period they are grouped together into a less damaging inquiry. In essence, they will look like one inquiry. Tip! Pay your bills on time. That's the first advice you'll get when you're looking for ways to increase credit score. 3. I'm not responsible for the debt if I co-sign: On the contrary, if you choose to co-sign for a friend or relative be careful. You are responsible for the entire debt if the person you co-signed for decides not to pay. On top of that, even when the account is in good standing the debt is on your credit report. This can effect your ability to get a loan when the time comes. Tip: Don't do it. 4. I'm going to close my credit card account to increase my credit rating- Not so fast, when you close an account, you are deleting all of the credit history that accumulated since that account has been open. In effect, by closing your account you could actually lower your score. Tip! Try to keep your credit balances as low as possible. You can also ask the lender to increase your credit limit which can increase your credit score. 5. Under 35%?- Here's the magic number. Always keep what you owe on any particular credit card under 35% of the limit. You may pay your bills on time every month, but if you're near your credit limit your score isn't as good as you think it is. Improving your credit score can save you thousands of dollars on purchases over your lifetime. You'll want to keep track of your credit score periodically throughout the year, if you have errors on your credit report resolve them. Improving your credit score isn't hard, but it does take a little effort.
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