By now most people are aware of the importance of their credit score and the huge financial costs and hassles that a bad score can cause. However, there’re still many misconceptions regarding credit scores. Here are some of the most common mistaken beliefs that people have.
Checking my credit score can hurt my score
You may have heard that the very act of checking a credit score can have a negative impact on your score. It’s true – completing a credit application can actually reduce your score by 10 points each time, but it’s not a huge deal.
“Checking your own credit score is considered a soft inquiry, and won’t affect your credit,” says Experian. Soft inquiries don’t affect your credit scores, but hard inquiries — when a lender with whom you’ve applied for credit reviews your credit report as part of their decision-making process — can.
“You can check your credit score as often as you want without hurting your credit, and it’s a good idea to do so regularly,” Experian notes. “At the very minimum, it’s a good idea to check before applying for credit, whether it’s a home loan, auto loan, credit card or something else.
I checked my score and everything looked good — so I am fine
You actually have three scores because there are three credit tracking agencies; Experian, Equifax, and Transunion. It’s possible that you have a different score with each, as any one of them may have received incorrect or detrimental information about you. You should always check all three of your credit scores as you never know which one your bank or credit card company will use.
If I am a victim of ID theft, I will be notified by my bank or credit card company
Unfortunately, many victims of identity theft discover far too late that they are victims. If a criminal uses your identity to take out a loan you may only find out when the creditor contacts you looking for re-payment. However, regular monitoring of all your credit scores is a great way to immediately spot when someone is attempting to illegally use your identity so that you have a chance to stop the crime takes place.
My credit card company can’t cancel my card without warning
Yes, they can, and increasing they do. More and more credit card companies are tightening their risk profiles and eliminating customers that deem too risky. They often mail out a cancellation notice at the same time as they pull the card, leaving many consumers embarrassed to discover what has happened when they try to use the card at the register. Ensuring that any negatives on your account are corrected or removed will ensure this does not happen to you.
Checking and managing my credit ratings is a hassle
Not true. There are services you can hire to do it for you, or you can just check the agencies on your own. In fact, some banks now offer free credit checks as part of their services. Either way, it takes a moment to get the info you need and feel secure about your finances.