Credit Score Myths

Single Mom Financial Help

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Many consumers have said that seeing their credit score causes anxiety. However, there is no reason for your credit score to cause anxiety if you are aware how the grading system behind your credit scores work. There are also quite a bit of misconceptions and myths that people make up about credit scores.

Many people have been under the impression that the places you live or your ethnicity or even your job affect your credit score numbers.

That is a major myth, that is not true at all.

Let’s start out with clearing up what exactly a credit score is. The credit score is a number that determines many thing about your financial life. It determines how much you will pay for loans and mortgages. This number basically controls and has a big part in the financial decisions in your life. These scores range from 300 (which is low) – to 850(which is a perfect score. The higher and closer you score to 850, the better you score is and the better terms and conditions you will get from lenders and other financial authorities.

Here are what credits scores are actually based on:

They are based on how timely you make your payments. They are basically based on financial history and your ability to repay loans and mortgages on time.

There are three bureaus that are in charge of calculating the score, Equifax, Experian and Trans Union.

Every year, every single person is entitled to a free copy of their credit report from each bureau. Make sure that you are taking advantage of that. Make sure that you check all mistakes and make sure they correctly reflect your financial history. A major mistake people make is not checking their credit reports.

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