A credit score is very real and separately tied to your financial health. Most young professionals now have credit cards and do not have any idea of what credit score is all about. Plenty of them has misconceptions about what the three-digit number really means.

If you think your credit score only comes in handy when applying for loans and credit cards, think again. Your credit history can affect your insurance policies, including auto insurance, homeowner’s insurance, life insurance and more. Here are some myths that you must know about your credit score.

1. You only have one credit score.

Our credit industry uses many different scoring models which generates consumer scores. We have these lenders, creditors, and others that use various formula and they actually weigh that information in your credit report differently.

The information that they used to calculate your credit score may vary based on the credit bureau reports, quite complicated right? But the truth is, there’s no one true credit score, but same factors tend to affect your credit score regardless of the scoring model.


2. All credit reports contain the same information.

There are four credit bureaus in the Philippines, we have the CIBI Information Corporation, Compuscan, CRIF Philippines, and the TransUnion. All these four maintain separate credit reports in their consumers. And each version of your credit score may actually not contain all the same information.

Some of the reports are more detailed than the other credit bureaus. And this information may vary because some of the companies don’t report each activity to all these credit companies.

3. Checking your credit report can ding your credit score.

From the word check, some customers actually do check or inquire of their credit standing. This myth actually based on the fact that when a lender makes a hard inquiry on the credit report, it can decrease the credit score.

4. Debt is bad for your credit score.

Having too many debts and missing loan or credit card payments is truly bad in your credit score. Paying the minimum amount of your credit card may all also affect your credit score. However, simply having debt is not harmful at all. The mere fact is that you need to responsibly manage all your debts.

Paying your bills on time, paying credit card bills total amount may raise your credit score over time. Yes, borrowing is necessary, you can buy a car, a home and build credit scores. Debt itself is not something to be afraid of as long as you can handle it responsibly.

5. Close old credit cards.

Plenty of people are now enjoying cashless transactions. They want to get more cards, but this posts serious risk on money management. Try to think of your salary, what if you make it a habit to keep swiping your cards until you notice that you have overcharged. Your paycheck is not enough to pay for those bills.

Just a friendly tip, keep only one card. Aside from keeping you away in trouble, you could easily manage it. There are a couple of factors that affect your credit score which included credit history and debt utilization. So, keeping an old credit card that you would not need with a zero balance would have benefits.

6. Paid-off debts have no more impact on your credit score.

Paying your debts on time and managing it responsibly is a good thing. Frequently late payments can definitely hit badly on your credit score.

Even after you paid off, debts can remain on your credit report for up to seven (7) years. Remember that every bad move you do on your credit card, loans, and etc., will drag your credit score for years to come.

7. Money can buy a good credit score.

Some people believe that the easiest way to maintain a good credit card is having more money. Unfortunately, income does not affect the credit score. It is how you manage your debts and credit cards that can directly impact it.

Let’s say you got a payday loan in singapore from a reputable cash mart licensed moneylender. Even if you have a high salary, if you do not pay your loan, then you will have a history of defaulting a loan. This will create a major ding on your credit score.


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