If you want to take steps to improve your credit score, you need to have access to the right information. Some common ways people think they can boost their credit scores end up hurting rather than helping them.
Credit avoidance is best
Some people believe it is best to only work with cash and to stay away from credit altogether in order to be financially sound. This can cheat people out of some of the benefits that come from having good credit.
Those who do not have a credit history find it very difficult to obtain auto loans, mortgage loans or credit cards because lenders always check credit history. With good credit, you can qualify for better interest rates, lower deposits on utility accounts, lower insurance premiums and more.
Kikoff is a company committed to widening the circle of opportunity for those who have waited too long to start building credit despite the fact that they may have a job and an income. It has a free credit building option that gives a small loan with no interest or fees. Create an account, receive instant approval and you get $12 in your account, which you pay back at $1 a month to start building your credit history.
A good income means a good credit score
Your job title and how much you make have no direct influence on your credit score. The score is based on the information in your credit report. This information is all about how you manage any borrowed funds, like loans and credit cards. Your employment situation may indirectly affect your credit score in that it may affect your ability to pay off your debts.
Checking your credit score will lower it
Pulling an annual credit score report or checking the score through a bank is considered a soft check and it will not lower your score. Just looking at it will not have any effect on the score.
If anything, checking your credit score is a sign that you want to manage your credit responsibly and you may be able to pick up errors and mistakes that you can query. A hard check that may be done when applying for a loan or a credit card may slightly lower your score because the application suggests that you may be adding debt.
Closing an account raises your score
How long you have had accounts open plays a role in your overall score. If you close an account you have had for a long time, it can lower your credit score. For instance, if you close an account for a credit card because you do not use it, you won’t improve your score.
In fact, your score may even go down because credit scoring models do not measure risk by how much credit you have available but by how much of it you use. When you close an unused card, you reduce your total available credit and when the balance to limit ratio increases, your score will suffer.
Paying a collection removes it from a credit score
If the debt is legitimate, paying a collection account can prevent you from getting sued but it is not automatically removed from your credit report. If you believe that paying off all the negative items on your credit report will instantly give you a clean slate, you are in for a surprise.
Paid collection accounts will stay on your credit reports for seven years from the date of the original default. Paying a collection could even drop your credit score with certain scoring models as the new payment creates recent activity.