Failing to understand what actions affect an individual’s credit score can end up costing them a lot of money. Credit score is what lenders use to determine whether to lend someone money and what kind of interest rate they can give – and when someone is stuck with a higher interest rate, a loan will cost even more.
Although LoanMart tries to work with everyone who needs help from a non-traditional lender, we may not be able to offer loans to people with no credit or extremely bad credit. We want our customers to understand how they can make positive changes to their credit score, and that starts with understanding what is true and what’s false about our customer’s credit history, credit activity, and how it can affect their credit score.
Before individuals start looking for an online car title loan, make sure they understand the truth about these myths surrounding credit. We want our customers to keep their good credit score in tact!
Myth 1: Having Different Types of Credit History is a Good Thing
Having a diverse credit history that shows individuals are capable of managing different types of credit is a good thing for their credit score. But if they co-sign loans with another individual in order to diversify the kind of credit they hold, this could negatively impact their score if the other person fails to make loan payments on time.
Even if an individual co-signs on student loans or car loans for someone else, if they fail to make payments or they make a late payment, credit score will go down for the borrower.
Myth 2: All Credit Inquires Are Bad
Credit agencies recognize that when multiple inquires show up all at once from something like a mortgage lender, a borrower is likely being a smart consumer and searching for the best rate. Borrowers won’t be penalized if the inquiries are grouped together and made within a few days of each other.
Myth 3: Age (and Other Personal Information) Matters
Age and other demographic facts about an individual won’t matter at all when it comes to determining their credit score. Here’s what does factor into a person’s credit score: credit history, late or missed payments, having high balances, and the age of the credit history.
Myth 4: People Can’t Improve Their Score
People can always take action to get a better score! Don’t close the oldest account, since the age of the credit history is a factor. Make sure to pay off all credit card balances every month, make payments on time and in full, and don’t use too much of available credit (don’t carry big balances even if you have a high limit).