Credit Score Myths Everyone Should Know

Credit score

A solid credit score is important for the financial well-being of individuals. It helps obtain high-limit credit cards.

Myths about credit score

1. Credit Score Depends on Income; Credit scores are based on credit report details which include payment history, credit utilization and credit management. Low or high income does not impact the credit score.

2. Closing old accounts improves score

Closing old accounts does not boost the credit score. Closing an old credit card or bank account can shorten credit history which might impact the score negatively.

3. The score drops if one applies for a New Credit

Applying for a new credit card might slightly impact the credit score due to the inquiry made on the report. However, if one applies only once or twice and not too frequently, the effect will be minimal. 

4. Poor credit scores makes one ineligible for credit

A low credit score does not make one ineligible for any loans or credit cards. While it may limit access to premium credit cards or favourable loan terms, there are still many options available.

5. Debit cards affect credit scores

Using debit cards does not affect credit scores. Debit cards are linked to savings accounts and involve no borrowing, so transactions made with them do not contribute to the credit history or score.

Compiled by Syed Muskan