There are many myths when it comes to credit, and the most prevalent seems to be that you can severely affect your score simply by checking your credit report and your credit score.
This is not true at all, according to Julie Bruning, Vice President of Consumer Lending at SAC Federal Credit Union.
“Knowing your score and where you stand is important for keeping yourself on track with building credit, or with credit recovery,” she says.
What does hurt your score? Here’s a sampling (for a more in-depth look at credit, see our free e-book: Building Blocks of Credit):
- Too many credit checks by others, like credit card companies, banks, car dealerships, and lenders. When you apply for several loans for cars within a short time frame, the credit reporting agencies see the activity as negative, and lower your score accordingly.
- Errors and other misinformation within your credit report. Many reports contain serious errors that could affect your score, so reviewing your credit report regularly could help you catch any score-lowering info. Take time to dispute the errors, and you could boost your score as a result.
- Paying bills late. Your credit history is a huge part of your score, and paying on time will keep your score higher. Paying credit cards late, in particular, can mean a major wallop to your credit, because it can increase your interest rate, incur late fees, and linger on your credit report for years.
The late-payment grace period
Late payments aren’t reported to the credit bureaus until you’re 30 days past due, so if you have a month where you’re playing catch-up, you have that time frame to get your payment in before it’s reported. In general, though, aim to pay before the actual due date.
When it comes to credit, your score reflects your habits – good or bad – and is simply an indication of where you stand in relation to risk. If you have a high score, banks and lenders know that you’ll be less likely to default on a loan, and if you have a lower score, the risk of default increases, so your interest rate will, too.
Stay on top of your credit rating by checking your score annually. As Bruning says, “Know your starting point, and you can go from there.”