Credit Do’s and Don’ts

Credit Do’s and Don’ts

Source: Photo by Suzy Hazelwood from Pexels

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Our world revolves around credit so it’s time to set the record straight!

Source: Photo by Suzy Hazelwood from Pexels


There are lots of misconceptions about what does and does not affect your credit score.  The best way to get answers is to deal with your lender, credit card company, credit union or some reputable source.  However, there are a few things the public should know:

1. Does checking my credit score lowers my credit score?

Nope.  A credit report inquiry only hits your credit score when it’s related to a credit application -like a credit card or mortgage.  Normally you can check your credit score for free online with most card companies.   Checking it frequently yourself is actually a good habit.  Make sure you stay on track and nothing unusual has happened to your accounts. FHA has pointers on understanding your credit score.

2.  Does income impact my credit score?

Nope.  Your income or job title (while it may be impressive) doesn’t directly impact your credit score.  Credit scores are based on your credit report’s information which highlights how you manage debt.

3. Is there only one credit score?

Nope. There are several credit scoring models that are used to calculate your credit score.  Each time somebody checks your credit they’re doing it for different reasons (credit card, rental application, loan).  Each request looks at your credit history differently.  It’s the reason why checking the credit score yourself can get a different number than a lender pulling information.

4. Does paying off debt increase your credit score?

Yes and No. It’s not a trick question.  The answer is yes when it comes to credit card debt. However, it’s not true for “installment debt” like mortgages and student loans.  Check with your bank, credit union, or lender about the ups and downs of paying off a loan early.  While it is good to save on interest payments for some borrowers paying off a loan can leave them with too few credit accounts.

5. Is 850 the highest credit score?

Yes.  And while it would be nice to have a special advantage having a score of 850-it’s just a number.  In today’s world of low interest rates, most professionals will tell you a score of 760 or above pretty much entitles you to all the same benefits and deals.  I’m not discouraging borrowers from trying to maintain a high credit score but don’t expect bonus points or a blue ribbon for the highest number.

6. Do student loans affect my credit score?

Yes.   Your credit score isn’t just impacted by credit card bills. To maintain good credit you need to pay all your bills on time.  This includes student loans, mortgages, utilities, student loans, and other bills like medical.

7. You don’t need to worry about my credit when you’re young?

Nope. According to the experts, the minimum age at which you can apply for credit is 18 and that’s when you should start worrying about your credit score. Young people start building credit as soon as possible. The length of your credit history is a big factor in your credit score, so the sooner you establish credit the better.

Credit ratings impact our lives every day. If you have a question and don’t know who to ask – your Realtor® can probably refer you to reputable people.