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It is quite common that most of the people have a wrong perception of credit score and today we are going to clarify some of these myths. Moreover the credit score is more important because it can get you better interest rate for car loans, mortgages, and any other debts. In short it helps you to save some money in your pocket at the end of every month. It is in your best interest that you should understand the reason why you need to have a good credit score and what are the secrets behind a good credit score.
• Most of the people do not understand the fact that 35% of your credit score is calculated depending upon your past debt over last 30 days. So in case you are unable to pay the balance in time, make sure that you do not cross the 30 days deadline for submitting the balance.
• Another major factor you should keep in mind is to avoid cancelling your credit cards and especially if the credit card is 5 or 10 years old. You would be amazed to know that 15% of your overall credit card history depends on the length of your credit card history and moreover leaving an account open will help in improving your debt to credit ratio.
• Most of the individuals find it good to go on buying things with cash but they do not understand the fact that no credit means bad credit to all the credit lenders. Moreover there is a time when you are unable to pay the money in cash like while buying a new car or going for a new house. So it is advised to open an account on your name and use your credit card occasionally.
• It is advised to avoid applying for multiple credit cards or multiple credit applications at once. It shows that you are in some kind of financial need and this action leaves a ding for at least a year on your account.
• Most of the people are concerned about the future of their teens with respect to credit score. The best advice is to go for credit cards with low-limit card or prepaid card; it helps in building a positive credit foundation for your child.
• Make sure that you never falsify on your credit score because your credit score can be easily known by anyone and you may face legal action for falsifying the credit score.
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