True or False? Five Myths About Credit Scores Unveiled

by Jim Brennan

There's a lot of information – and misinformation – circulating about credit scores. Your credit score is important because a low score can cost you a lot of money in terms of higher interest rates or even prevent you from getting credit for things you need, like a new car. So it’s good to protect your credit rating, but make sure you do it the right way. Sometimes you can inadvertently hurt your score even when you’re trying to do the right thing.
How educated about maintaining a good credit score are you? 
Here are five myths about your credit score unveiled:

1) True or False? Open as many accounts as you can early on.

• False. New accounts lower your average account age which could lower your overall score.

2) True or False? Close old, unused credit card accounts.

• False. A card that you’ve held for years is better for your score than a new card. Just don’t use the old cards, and gradually close them out over time.

3) True or False? Don't sign up for too many retail incentive cards.

• True. Your score is affected by the number of times credit card companies request your credit report because it may look like you’re desperate for credit.

4) True or False? Don't open too many credit card accounts.

• True. Opening a lot of credit card accounts probably won’t raise your score. Your best bet is a mix between secured loans, like home and car loans, and unsecured loans, like credit cards.

5) True or False? Don't check your credit score too often.

• False. While allowing banks or other lenders to check your score often can have a negative impact on your score, checking your own credit score yourself has no impact on your score – so check it as often as you’d like.