Credit FactsCredit Facts
Credit shouldn’t be complicated! At Warrior Credit, we know that informed clients are empowered clients. Here’s a little Credit 101 to help you take control of your credit score — now and moving forward.
5 Credit Facts You Should Know
Over 20 years in credit repair, we’ve seen a lot of myths and confusion surrounding credit scores, credit reports, and ways to improve your score. It’s time to gain clarity around credit so you can put your best foot forward.
Fact 1: One in five people have an error on their credit report.
An FTC study found that 20% of people have at least one error on at least one of their credit reports. Even seemingly small errors can lower your credit score and potentially prevent you from securing loans or favorable interest rates. It’s worth checking your credit report regularly and addressing errors as soon as possible.
Fact 2: You have more than one credit score.
Each of the three major credit reporting bureaus has their own way of scoring your credit history. This is why your credit score may vary from bureau to bureau. However, the actions you take to increase your score, such as disputing errors, should impact all of your credit scores.
Fact 3: Closing credit accounts will lower your credit score.
One of the factors that influences your credit score is the age of your credit accounts. This is why your score may drop if you close an old credit card. That credit account can no longer be factored into your score, so the average age of your credit accounts may decrease. If you need to cancel a credit card, consider increasing your credit limit on another to maintain the same credit utilization ratio.
Fact 4: A low credit score is expensive.
Having a low credit score doesn’t necessarily mean you will be denied for a loan. However, it does increase the lender’s risk, so you might have to pay a higher interest rate. This means that a low credit score could cost you more money in the long run. Higher credit scores may gain more favorable rates, helping you secure the funds you need for less money over time. This is one reason why many Americans hire a credit restoration service, because the upfront cost is less than the high cost of interest payments.
Fact 5: Checking your own credit report doesn’t affect your score.
Any inquiries into your credit report are categorized as hard or soft. A hard inquiry indicates action, such as when you’re about to take out a loan or open a new line of credit. Soft inquiries, however, simply indicate interest. When checking your own credit score and credit report, these count as soft inquiries. Your credit score will not be affected. In fact, you should regularly check your credit report for errors that could impact your ability to secure a loan or credit in the future.