1.Your Income Affects Your Credit Score
Your credit score is based on credit history, not your salary. Even with a high income, poor credit behavior can lead to a low score. Conversely, good credit habits can lead to a high score, regardless of income.
2.Carrying a Credit Card Balance Boosts Your Score
Holding a balance on your credit card can harm your credit score. It increases your credit utilization rate, which can lower your score. Avoid interest payments and maintain a good score by clearing your monthly dues on time.
3.Ignore Your Student Loans
Your credit score isn’t just about credit card payments. Timely payments on student loans, utilities, and other bills are crucial. Set up autopay to avoid missing payments and check for interest rate discounts from your loan provider for autopay enrollment.
4.You Can’t Improve a Low Credit Score
A low credit score isn’t permanent. Improve your score by developing good credit habits. Negative transactions fade over time—typically three years for most, though bankruptcy and defaults can last up to ten years. Manage your credit responsibly to enhance your score.
5.Closing Old Accounts Boosts Your Score
Closing old credit accounts can shorten your credit history, potentially lowering your score. A long credit history gives lenders a better picture of your credit behavior. While closing accounts can reduce fees and fraud risk, it might negatively impact your score. Keep long-standing accounts with high limits and low balances open for a positive influence on your score.
6.Applying for a New Credit Card Hurts Your Score
Applying for a new credit card won’t necessarily harm your credit score unless you apply for many cards in a short period. Each application results in a credit inquiry, and multiple inquiries can suggest financial distress, lowering your score. Apply wisely by choosing a single reputable provider rather than applying to multiple providers at once.