Credit Score Myths Debunked

Not everything you’ve heard about credit scores is true.

To be sure, credit scores matter for your overall financial health. Having a healthy credit score is key to accessing loans, the best credit cards, and other economic benefits.

And when buying a home and getting approved for a loan, a good credit record is essential if you want lower interest rates. Having a bad score could mean you end up paying more throughout the life span of your mortgage. If lenders see that you have a good credit score, it communicates that you can meet your financial obligations on time, and you’d be more likely to get a lower interest rate.

Credit scores are not the end-all and be-all requirement for mortgage applications. But they still play a big part, and with building or repairing credit comes some common misconceptions. We debunk a few of them here.

A Bad Credit Score is Permanent

This is false and requires a more nuanced response. Credit scores improve over time if you consistently pay on time and avoid actions that could hurt your score. These actions include maxing out your cards, paying late, closing a card that still has a balance, and more. Conversely, making timely payments, limiting card usage, paying off high-balance cards, and repairing errors in your credit report are some ways to help boost your score.

Checking My Credit Score Regularly Will Only Hurt It

This is false. There are two kinds of credit score inquiries: soft and hard. Hard inquiries happen when you apply for financing, and lenders check your credit score as part of the process. Common hard inquiries include loan applications for a home, auto, credit card, and apartment rentals. Checking your score through services like Credit Karma or major credit bureaus counts as a soft pull and does not negatively impact your score. Soft inquiries or “soft pulls” typically happen in background checks such as employment verification, but there is another myth related to this that we’ll address in the next point.

My Employer Can See My Score

This is false. Employers see a different kind of report compared to lenders. Potential employers can check your credit history, but they will not see your score. Usually, employers look for signs of financial distress or consider your credit history to indicate how you handle your responsibilities.

Younger People Don’t Need to Worry About Credit Scores

Another misconception is that teens don’t need to be concerned about their credit scores until they’re older. This is false. Credit history is part of how credit bureaus calculate your score, so it’s better to start building your credit earlier. The minimum age to apply for credit is 18 years old.

Student Loans Won’t Negatively Impact My Score

Unfortunately, student loans and other forms of debt can and do affect your score. Your score isn’t limited to just your credit card bills, so it matters that you also pay your student loans on time.

My Debit Card Can Help Boost My Score

Also false. Your debit card is different from credit. Debit card activity doesn’t get reported to credit bureaus, so using (or not using) your debit card has no direct impact on your credit score.

I Can Merge My Score with My Spouse

Not true. If you and your spouse apply for a joint loan, lenders will consider both of your scores, which will impact your scores individually.

Credit Scores and Buying a Home

If you’re looking to buy a home and you’re worried that you have too much debt, remember that lenders also look at your debt-to-income ratio or DTI. This ratio accounts for how much of your income goes to paying off your debt. Generally, a poor credit score could mean higher interest rates, but the existence of debt doesn’t automatically discount you from qualifying for a loan.

Every lender will vary, and some loans require lower credit scores, such as FHA loans. If you need help knowing how much you can realistically afford, getting pre-approved is a wise decision, even though it’s not a guarantee that you’ll get the loan. But for homebuyers, especially if it’s your first time, pre-approval can help you with your budget. Note that pre-approvals do impact your credit score (this is considered a hard inquiry). Whatever the type of loan you’re aiming for, it’s always a good idea to try and get a healthy credit score before you apply for a mortgage.

Homebuying can often be intimidating, but it doesn’t have to be. Whether it’s your first time buying a home or you’re refinancing an existing property, our team at National Home Loans helps you navigate through the process. Got more questions about credit scores and buying a home? Don’t hesitate to contact us today.

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Written By

John Giannattasio

John Giannattasio is an independent mortgage broker based in San Diego. He brings a wealth of diverse business knowledge and experience to his mortgage practice, which results in a stress-free, seamless, and strategic experience for his clients.

Estimate Your Savings

Hero Reward:
$6,300

Home Price:
$8,40,000

Amount shown is an estimate for a hero buyer purchasing a home with a Homes for Heroes real estate and mortgage specialist. Hero Rewards may vary.*

Start Saving Now
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