King bell
VIP Contributor
If you're trying to improve your credit score, you may be inadvertently sabotaging your efforts by believing one (or all) of these common myths. Read on to find out which myths are keeping your score lower than it should be – and what you can do to fix it.
Myth #1: Closing old accounts will improve your credit score
One common misconception is that closing old credit accounts will improve your credit score. In fact, the opposite is true – closing old accounts can actually hurt your score.
That's because your credit score is partially determined by your "credit utilization ratio" – which is the amount of credit you're using in relation to your total credit limit. So, if you close an account with a high credit limit, your credit utilization ratio will increase, which will likely lower your score.
The best way to improve your credit utilization ratio is to keep your balances low relative to your credit limits. So, if you have old accounts with unused credit lines, it's actually beneficial to keep them open and active.
Myth #2: Checking your credit report will lower your credit score
Another myth that can keep your credit score lower than it should be is the belief that checking your own credit report will somehow lower your score. This is simply not true.
In fact, it's actually a good idea to check your credit report regularly to make sure there are no errors that could be dragging down your score. You can get a free copy of your credit report from each of the three major credit bureaus once per year at AnnualCreditReport.com.
Myth #1: Closing old accounts will improve your credit score
One common misconception is that closing old credit accounts will improve your credit score. In fact, the opposite is true – closing old accounts can actually hurt your score.
That's because your credit score is partially determined by your "credit utilization ratio" – which is the amount of credit you're using in relation to your total credit limit. So, if you close an account with a high credit limit, your credit utilization ratio will increase, which will likely lower your score.
The best way to improve your credit utilization ratio is to keep your balances low relative to your credit limits. So, if you have old accounts with unused credit lines, it's actually beneficial to keep them open and active.
Myth #2: Checking your credit report will lower your credit score
Another myth that can keep your credit score lower than it should be is the belief that checking your own credit report will somehow lower your score. This is simply not true.
In fact, it's actually a good idea to check your credit report regularly to make sure there are no errors that could be dragging down your score. You can get a free copy of your credit report from each of the three major credit bureaus once per year at AnnualCreditReport.com.
