Money myths can be deadly for your dream of financial freedom.
According to the TransUnion 2017 Myths vs. Facts Survey, plenty of folks don’t get the fundamentals of credit scoring, reporting and building, and aren’t clear what factors impact a credit score. Confusion plus myths add up to crucial credit mistakes.
Separate fact from fiction.
- Myth: It’s not good to check your own credit.
About 43 percent of the more than 1,000 people polled believed this myth to be true. Checking your credit is smart.
At least once a year, see what the credit bureaus are saying about you. Report errors, and look for signs of fraud. Get your free report once a year at annualcreditreport.com.
- Myth: Closing a credit account is bad.
Thirty-five percent of those surveyed said closing a credit card hurts a credit score, and 20 percent had no clue what the effect would be.
Actually closing an account that represents a small amount of available credit, or has a short history, may have minimal or no impact on your credit score. Closing an account may hurt, however, if it represents a large portion of your available credit.
“When determining whether to close an account, consider the percentage of available credit the card provides and the length of credit history associated with the account before closing it,” says Heather Battison, a vice president at Trans Union in Overland Park, Kansas.
- Myth: Credit reports include marital status.
Your report says nothing about your love life. However, 44 percent of those polled said marital status factored into credit reports.
Still, credit is paramount in any partnership. “If you finance joint purchases, the individual with the lower credit score can dictate lending terms or even the loan approval rate for the pair, if they apply jointly,” Battison says.