Good Credit Habits: Myth or Fact

Understanding good credit habits, your credit score and how it affects you is an essential part of being not only a consumer but a member of society. Your credit score reflects your creditworthiness at a given point in time. This number can then be used by mortgage lenders, car loan lenders, and credit card companies to determine an individual’s eligibility. For a possible lender, your credit score is a number used to help them decide the likelihood of being repaid on time. When it comes to understanding credit, there are several things to consider regarding good credit habits and bad credit habits.

Myths:

  • My score will drop if I check my credit: Checking your credit report counts as a “soft inquiry” and doesn’t harm your credit at all. Only “hard inquiries,” made by creditors and lenders when you apply for credit, can bring down your score a few points.
  • Paying off a debt boosts your score by 50 points: Credit reporting agencies determine your credit score using a complex algorithm that includes hundreds of factors and values. It’s almost impossible to calculate the difference in points changing one factor might make.
  • My poor score will be with me forever: Your credit score is a snapshot of your credit at a particular point in time. That means as you continue to make payments on time and pay down your debt, your credit score will steadily improve with time. A low score today doesn’t mean you’ll have a low score forever.

Good Credit Habits

Pay bills on time:

Making payments on time is one of the most important ways to establish excellent credit. Almost all of super-prime consumers and people with prime credit have no late payments on their credit reports.

  • Keep your credit card balances low: Credit utilization, or how much debt you carry on your credit cards versus your available credit; is a good indicator of how easily you can make your debt payments.
  • Apply for credit infrequently: Having multiple credit inquiries in a short period may signal that you’re struggling financially and are using credit to get by, or you are living beyond your means.

We believe that everyone deserves to live the life to which they aspire. Our mission is to help you improve your credit rating through a personalized and holistic approach. Every person should be given a fair opportunity to make a significant purchase, like a home. We believe that your past doesn’t always have to dictate your future. When we help our customers achieve these goals we set them on a path to continued success. We help them recognize past financial struggles and give them the tools and education to improve their financial situation and quality of life. With Good Credit For Life, our name is our guarantee! Call now for a free consultation and start down the path to good credit!