Credit scores and mortgage rates go hand-in-hand. Borrowers with high credit scores tend to get lower interest rates on mortgages than borrowers with low credit scores. There is a wealth of misinformation about credit—in fact, credit users, even those who check their scores often, incorrectly believe age, employment history and salary factor into a credit score, according to a recently released TransUnion survey.
“Checking your credit score is an important component of financial responsibility, but consumers should do more,” said TransUnion Consumer Interactive President John Danaher in a statement on the survey. The TransUnion Consumer Survey shows that even those who monitor their credit are only skimming the surface of their credit report and often don’t understand the factors that comprise their credit score.”
The most common misconceptions both credit-checkers and non-credit-checkers should know, according to TransUnion, are:
Myth: Checking my credit report will lower my score.
Checking your credit report will not impact your score—a lender checking your report, however, may.
Myth: Using my debit card will boost my score.
Use of a debit card does not reflect your credit habits, and, thus, will not impact your credit score.
Myth: My salary factors into my score.
Your salary will not impact your credit score, but a lender may factor it into the decision to approve your loan.
Myth: My credit card bill can be paid late, so long as it is paid.
Paying your credit card bill late will impact your score—late payments may remain on your credit report for seven years.
Myth: My credit score is all I need to know.
Checking your credit score is important, but so is checking your entire credit report. Assessing the full report not only helps you understand what impacts your score, but also helps you identify areas for improvement or errors. For you complimentary credit review contact an experienced Loan Originator today.
Understanding your score helps you to understand what you may qualify for now as well as identify a strategy for improvement. Once you credit score is where you want it to be, you can get a great advantage in purchasing power by qualifying for a lower interest rate.