What is a credit score?

A credit score is a measure of the capacity of a person to pay back the sum borrowed. It is the reflection of their creditworthiness in numerical terms. A credit score is a 3-digit number that falls within the 300-900 range, the highest being 900. Credit scores are determined by the country’s credit bureaus after many variables are taken into accounts, such as the length of the credit history, repayment histories, credit inquiries, and others.

More credit score data is available than ever but sadly many customers appear to have negative assumptions about credit scores. Here are the 10 myths about credit score and how to tackle them.

  • A Bad Credit Score Remains Forever:

Getting a strong credit score matters because in other words, whether you repay your debts or not, lenders use it to assess your financial trustworthiness. For the best credit cards and lowest rates on mortgages and loans, a high credit score helps you get accepted.

A low score means that lenders can give you higher interest rates, or they will all together decline your application. For rental housing or certain positions in the financial sector or the federal government, credit checks may also be required. So we can safely say that bad credit score will only persist if you continue making poor choices that might hurt your credit scores like paying late or ignoring bills until being sent to a collections agency.

  • Each Person Is Limited To Only One Credit Score :

There are generic scores for customers, mostly generated by the three national credit bureaus which are made accessible by these credit bureaus, by FICO, some lenders, and some credit bureaus websites which are independent (such as CreditKarma.com, Quizzle.com, Credit.com) and these scores give consumers an idea of their success. General credit risk, whether they can get credit and whether they can get credit. They are going to be paying subprime rates consumers who are applying scores determined by individual lenders are also eligible for credit. When different lenders use the same ranking, different rates can be paid, so it is important for borrowers to shop around.

  • Marriage Will Combine Credit Scores :

Once you get married, you and your spouse will continue to maintain separate credit histories and credit scores. Although items like name changes will appear on your individual credit report, the financial moves of your partner do not have any effect on your report.

  • Employers Can Check Your Credit Scores :

Your credit score can’t be reviewed by prospective employers, but they can view and use a version of your credit report to determine your judgment and whether you might pose a financial risk. It is technically illegal against the law for employers to use credit ratings to test applicants.

  • Your Income Has An Impact On Your Credit Score:

A credit score does not depend on the annual revenue you get. Even when your annual income is Rs.5 lakh, you can have a higher score. Similarly, not getting a credit score is also possible for a person with an annual income of Rs.15 lakh.

  • Debit And Prepaid Cards Can Have A Positive Impact On Your Credit Score:

Debit cards do not appear or affect your credit score on your credit history. The money is automatically taken out of your bank account when you use a debit card. As you would with a credit card, you are not borrowing money. Unlike with a credit card, you don’t get a debit card bill at the end of the month. In your checking account statement, each debit card transaction is listed as a withdrawal from your checking account.

  • Having Zero Debt Will Result In Having A Good Credit Score:

Do not be under the illusion that it would delete the entry from your credit history by paying off debt. For years, the proof of the debt will remain in your credit history and affect your credit score and credit availability. These entries in your credit report would indicate that you have treated your debts professionally and have managed to pay off them successfully. Any future lenders will be reassured and put in a good word for you. On the other hand, any missed payments and reported defaults will notify the lenders about your financial handling capabilities and prevent them from approving your credit request.

  • Bad Credit Score Makes It Difficult To Get Approved For Anything :

A bad credit score makes it more difficult to get accepted, but when determining your creditworthiness. It’s not the only thing that borrowers and lenders consider. Other variables that play a part are wages and levels of debt. Also with a bad credit score, you may be accepted, but will be forced to pay a security deposit or a higher interest rate.


You want to ensure that you never end up in that place again, whether you’ve effectively pulled yourself out of debt or are still struggling by taking steps like checking your credit report, paying your bills on time, not maxing out on your credit cards and also getting a balance transfer credit card. You want to make sure that you never repeat the same mistakes again in your life.


Ashutosh Gupta

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