introduction
Most people believe their credit score is just a number—but it’s much more than that. Behind that three-digit figure lies a system banks don’t fully explain. Why? Because the more confused you are, the more profit they make. In this article, we’ll uncover the truth about credit scores, bust some myths, and show you how to take back control of your financial future.
Your Credit Score Isn’t Just truth About Loans
Many assume credit scores only matter when applying for loans or credit cards. In reality, your score can affect:
- Insurance rates
- Apartment rentals
- Job applications
- Security deposits for utilities
Banks Benefit from Your Low Score
A low credit score often leads to higher interest rates, more fees, and less favorable loan terms. This means more money for banks, and less for you.
What They Don’t Tell You: Lenders often target individuals with average or poor credit for high-interest loans they know will generate long-term profits.
Not All Credit Inquiries Are Equal
Hard inquiries (when you apply for new credit) can hurt your score. Soft inquiries (like checking your own credit) don’t.
Myth Busted: Checking your own credit score will NOT lower it. In fact, regularly reviewing your score helps catch fraud and errors early.
Closing Old Accounts Can Hurt You
Banks might suggest closing unused accounts—but this can shorten your credit history and reduce your overall available credit, which lowers your score.
Tip: Keep old accounts open (especially if they have no annual fee) to maintain a longer credit history and improve your utilization ratio.
Credit Utilization Is a Secret Weapon
Credit utilization—the amount of credit you’re using vs. what’s available—is one of the biggest factors affecting your score. Aim to use less than 30% of your total available credit at any time.
Insider Trick: Even if you pay off your balance monthly, your score can drop if your balance is too high on the statement date. Pay it down before the closing date.
