Three Credit Score Myths

When you apply for a loan, a mortgage, or even a job, your credit score plays a big role – and most Americans aren't doing very well. If you want the best interest rates and the most options, raising your credit score is important, but unfortunately, there's a lot of misinformation out there. Here are some of the biggest credit score myths that refuse to die; don't believe them!

Myth #1: You can remove unfavorable information simply by disputing it.

While it is true that you can remove incorrect information that's hurting your credit score, don't believe credit companies that claim they will be able to remove anything unfavorable on your report. When you dispute something, it has to be verified or removed in 30 days, but in the past several years, companies that help people file disputes have popped up all over the country, and today, companies realize that they only have a month to investigate your claim. Again, if you really do see incorrect information on your report, it can be removed by disputing it, but true information probably won't be removed.

Myth #2: Applying for loans with a number of companies to find the best rates will hurt your score.

When a creditor checks your credit score, it creates an "inquiry request" mark on your credit score, which can lower it. However, in most cases, inquiries in the same category (like mortgages or car loans) can be made multiple times with multiple companies as long as it is within 14 days. In addition, you can check your own credit score as often as you'd like with no negative effects, as long as you do sure through one of the three credit reporting bureaus or a legitimate credit score seller.

Myth #3: Credit cards hurt your credit score.

Credit cards certainly can hurt your score, but they don't have to. In fact, if you're responsible with your credit card, your report will actually be better than if you have no credit history at all. Go for the highest credit limit available, but make sure you don't use it – charge only what you can pay off at the end of the month.

Remember, the higher your credit score, the more money you'll save on interest and the stronger job candidate you'll be. If you choose to work with a company to repair your credit, remember to only work with a legitimate financial company that is licensed and isn't involved with any disputes via the Better Business Bureau.

This guest post is from Allison with CreditScore.net, where you can go to learn more about your credit score.

For additional information on credit cards or related topics please visit our library of credit card articles.