6 Credit Myths Busted
Podcast Transcription
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Hi everyone, thanks for joining me on another episode of PFCU's Money Talk podcast. As always, I'm your host Maddy. For this episode, let's cover some common myths about credit, some of which you may have heard before, some maybe are new, and maybe you didn't realize that they're myths at all. And credit's such an important piece of our finances, so I think it's important that we know what's true and what's maybe not so true. Let's tackle some common myths about credit.
Myth number one, checking your credit report or your score hurts your credit. Checking your credit actually doesn't affect your credit at all. As a matter of fact, you should be checking your credit report regularly at annualcreditreport.com to make sure that you don't have any fraud happening that you're not aware of and sometimes there's even mistakes on there that you want to make sure get corrected. Your credit's going to change when you apply for a loan because the lender is going to perform a hard inquiry in order to review your credit, but this usually isn't a big change and is temporary.
Myth number two, you only have one credit score. You actually have a lot of credit scores. There are many different scoring models that are used and according to Experian, there are over a thousand. That means that you have dozens, if not hundreds of credit scores. The most popular scoring models and ones that you've probably heard of before are the FICO score and the Vantage score.
Myth number three is that your credit score considers a lot of personal information, which is just not true. Your credit score does not take into account your demographics, your education, your career, your marital status, your race, your bank account information. It doesn't even have your income. And if you're married, you actually do not have a joint credit report with your spouse. So, when you do check your credit report at annualcreditreport.com, you're going to see that your credit information is yours and yours alone.
Myth number four is that someone can fix your credit score for you. Building your credit and increasing your score is something that you have to do by managing your credit and handling money responsibly. It can take time and there are services and financial coaching out there that can help you to develop a plan to do this. However, it's something that you just have to do by handling credit responsibly. PFCU actually has free financial coaching where you can sit down with someone and have some help developing a plan to improve your credit.
Myth number five is that you won't be able to get credit if you don't have credit. We all have to start somewhere, right? You have to get credit in order to build your credit. And there are a lot of options for you if you don't have it and you want to start building that credit history. So, a couple of things being that you can be an authorized user on a credit account. You can also have someone co-sign on an account for you. You can also get a secured credit card.
Myth number six is that once you have a bad score, it can never improve. Negative information like missed or late payments can stay on your report for several years. That is true. And it does take a consistent pattern of on-time payments for you to start adding that positive information on your credit report, but it is doable. That negative information is going to become less and less significant and that positive information is going to really start building up your credit score.
And there you have it, credit myths busted. Thank you all for listening to this week's episode and I will see you next time.
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