Unfortunately, credit myths aren’t uncommon. Even people who repair credit often deal with
credit myths. In this article, we’re going to explore the top three credit myths in 2021 so that you
can better understand your credit and how it works.
Myth #1: Credit Utilization Is 30% of Your Credit Score
30% of your FICO score is made up of how much debt you owe, though that is only the general
category. The entire piece of the pie is much more complex. Within this category, you’ll find
several other metrics, including:
● The total amount of what you owe on all of your credit cards
● The different amounts you owe on your various accounts, including credit cards,
installment loans, etc.
● How many accounts have balances
● How much you owe on your installment accounts, such as your credit cards and auto
loans
This means that revolving utilization is not worth the entire 30%, even though using 30% is
easier for understanding how it impacts your overall score.
Myth 2: When You Close A Credit Card, The Age Doesn’t Count On Your Credit Score
Consumers are often advised not to close their old credit cards, as they are told it will reduce
the age benefits you receive from them. Credit age makes up a whopping 15% of your score,
which is why this theory makes sense. Your credit age is also connected to your payment
history, which accounts for 35% of your credit score.
When you close a credit card, you will lose the age on the card, as well as the unused credit
limit associated with the card. More than likely, that unused limit was helping your credit score,
but it’s loss of age that is the biggest factor.
Employers Will Check Your Credit Scores
Yes, an employer can check your credit report, though remember, credit scores and credit
reports are two different things. Your credit score is a three-digit number that represents your
creditworthiness, while your credit report has information regarding your credit card accounts.
The credit reports that an employer gets are also different from those that a lender gets. Your
employer will not get access to your credit score.
Debunking The Top Credit Myths
It is important to remember all of these myths so you aren’t quick to believe everything people
tell you about credit scores. Luckily, there are some tried and true credit techniques that exist
out there, one of which we provide consumers with every day.
We’re talking about tradelines.
Here at Boost Credit 101, we specialize in helping people like you raise their credit scores with
high-quality tradelines. If you’re interested in how you can use tradelines to potentially improve
your credit score, get in touch with us at Boost Credit 101 today!
