7 Credit Score Myths Debunked
Your credit score is a number that lenders use to assess your creditworthiness. It’s based on a variety of factors, including your payment history, the amount of debt you have, and the length of your credit history. A good credit score can help you get approved for loans and credit cards at lower interest rates.
However, there are a lot of myths about credit scores. Here are 7 credit score myths debunked.
Myth #1: You need a perfect credit score to get approved for a loan.
Fact: While a perfect credit score is ideal, it’s not necessary to get approved for a loan. Lenders will consider other factors, such as your income and employment history, when making a decision.
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Myth #2: You can't improve your credit score once it's bad.
Fact: Your credit score can improve over time, even if it’s bad now. There are a number of things you can do to improve your credit score, such as paying your bills on time and keeping your credit utilization low.
Myth #3: Closing a credit card will improve your credit score.
Fact: Closing a credit card can actually hurt your credit score. This is because closing a credit card can lower your available credit, which can increase your credit utilization.
Myth #4: Having a lot of debt will improve your credit score.
Fact: Having a lot of debt will actually hurt your credit score. This is because lenders look at the amount of debt you have when they’re making a lending decision.
Myth #5: You can't get a credit card if you have bad credit.
Fact: There are a number of credit cards available to people with bad credit. These cards typically have higher interest rates and fees, but they can help you build your credit history.
Myth #6: You can't get a loan if you have bad credit.
Fact: There are a number of lenders who offer loans to people with bad credit. These loans typically have higher interest rates and fees, but they can help you get the money you need.
Myth #7: You can't rent an apartment if you have bad credit.
Fact: Some landlords will not rent to people with bad credit. However, there are a number of landlords who are willing to rent to people with bad credit.
Does Credit Score Matter in Australia?
Yes, credit scores matter in Australia. Lenders use credit scores to assess your creditworthiness, which is their way of determining how likely you are to repay a loan. A good credit score can help you get approved for loans and credit cards at lower interest rates.
Credit scores are important, but there are a lot of myths about them. Learn these facts about credit scores and how they can affect your financial future.
Get a free Australian mortgage assessment today.
Frequently asked questions
A credit score is a number that lenders use to assess your creditworthiness. It’s based on a variety of factors, including your payment history, the amount of debt you have, and the length of your credit history. A good credit score can help you get approved for loans and credit cards at lower interest rates.
You can get a free copy of your credit report from each of the three major credit bureaus once a year. You can request your credit report online, by mail, or by phone.
There are a number of things you can do to improve your credit score. Here are a few tips:
- Pay your bills on time. This is the most important factor in improving your credit score. Make sure to pay your bills on time, in full, every month.
- Keep your credit utilization low. Credit utilization is the amount of debt you have relative to your available credit. Aim to keep your credit utilization below 30%.
- Get a credit card and use it responsibly. A credit card can help you build a credit history. Use your credit card responsibly by paying your bill on time and in full every month.
- Request a copy of your credit report. You’re entitled to a free copy of your credit report from each of the three major credit bureaus once a year. Review your credit report for any errors and dispute any errors that you find.
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