10 Credit Score Myths Debunked Get the Real Facts
10 Credit Score Myths Debunked - Get the Real Facts Skip to content
Motley Fool Stock Advisor recommendations have an average return of 397%. For $79 (or just $1.52 per week), join more than 1 million members and don't miss their upcoming stock picks. 30 day money-back guarantee. Sign Up Now When you apply for a loan or a credit card, the creditor pulls your credit report. This is a hard inquiry. While a hard inquiry does affect your credit score, it is typically only by a few points. Additionally, when you apply for a similar type of loan (such as an auto loan) with a few different creditors, this typically counts as one inquiry if completed within a 30-day time-frame. A soft inquiry is when a creditor reviews only a portion of your credit report for educational purposes. Generally, a soft inquiry is something a credit card company does before sending you a pre-approval notice in the mail. When you pull your own credit report through a company like Credit Karma, this also does not affect your credit score.
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By Kristie Lorette Date September 14, 2021FEATURED PROMOTION
Your credit score and credit report can seem like elusive concepts – you know what each one is, but do you truly know how your credit score is calculated, and what your credit report reveals about you? While it is extremely important to be financially responsible by paying off your bills and not accruing debt, it is also wise to have a full understanding of your credit score and credit report, especially if you are a current and potential borrower. Unfortunately, there are many myths that may cloud your judgment and your self-assessment.Credit Myths
1 “ I can boost my credit score by using prepaid credit cards and debit cards ”
Prepaid credit cards and debit cards are not reported to the credit bureaus, so using them doesn’t affect your credit score either way. If you are unable to obtain credit cards but want to boost your credit, use a secured credit card instead. A secured credit card requires you to put up collateral to obtain the card, such as a car, boat, expensive jewelry, or an entire bank account. When you use the card responsibly, over time, your credit score increases, and then you can apply for a traditional unsecured credit card.2 “ Every time someone pulls my credit report it decreases my credit score ”
Whether your credit score is affected by someone pulling your credit depends on how they pull your credit report. What is known as a “hard inquiry” can decrease your credit score; however, if it is a “soft inquiry” then it does not.Motley Fool Stock Advisor recommendations have an average return of 397%. For $79 (or just $1.52 per week), join more than 1 million members and don't miss their upcoming stock picks. 30 day money-back guarantee. Sign Up Now When you apply for a loan or a credit card, the creditor pulls your credit report. This is a hard inquiry. While a hard inquiry does affect your credit score, it is typically only by a few points. Additionally, when you apply for a similar type of loan (such as an auto loan) with a few different creditors, this typically counts as one inquiry if completed within a 30-day time-frame. A soft inquiry is when a creditor reviews only a portion of your credit report for educational purposes. Generally, a soft inquiry is something a credit card company does before sending you a pre-approval notice in the mail. When you pull your own credit report through a company like Credit Karma, this also does not affect your credit score.