Popular Credit Score Myths Corrected
Lately there has been some confusion as to what leads to maintaining a good credit score. This is a result of the changing rules and regulations that apply to obtaining and managing financial accounts today.
In order to clear up some misunderstandings, certain myths have been lately revealed. Here are some of them as indicated by Ken Lin of Credit Karma, and further explained below:
# 1. Some people think you have to be in debt to have a good credit score. However, this could not be further from the truth. It is a proven fact and as Lin says, "People with scores above 800 have less debt than those with credit scores of 600 and 700."
Further explained, the focus should be on accumulating credit. However, it is not healthy to have mounds of outstanding debt. It is best to pay as much of your debt off as possible or keep up making timely payments.
#2. There is a common belief that wealthy people have better credit scores. While this is often true, often it is not true. It does not matter how little or how much money you have when you overspend you overspend. Chicago Tribune says, “Not all rich people pay their bills on time.”
#3. If you have no credit history, it is considered poor. This is what many people think. However, no credit is exactly that-no credit. That means there is no credit score scale no info no anything. It is a little bit harder to gain credit when you have none but there are ways to get credit if you have none. The key is to start out responsibly or later on you will have poor credit.
#4. It is better not to have any debt at all some people believe. It is if you have credit and you have paid off all your balances on time. However, you need at least some credit history to prove how well you can handle money. In this case, it is better to have at least a little debt provided you are making timely payments than to not have any debt at all.
What you see above is only a watered-down explanation of the teachings that Ken Lin gives. However, it gives you a brief overview of the kinds of principles this man teaches.
Hopefully this will have provided a better understanding of the credit score system. If so, that is your first step towards a brighter financial future.