Mortgage Rate News

Image by stargazer95050 via Flickr

You know that when you apply for a mortgage, your credit score is pulled. You know that you will only get the best mortgage rates if you have a good credit score. And you know that it is a good idea to work on improving your credit score if you want a better deal from your mortgage lender. However, if you base your efforts on these 5 credit score myths, you may be in for an unpleasant surprise:

1. Paying cash and avoiding credit cards will give you a good score. While this would be nice, it would completely undermine a credit industry determined to make money off you. You need to have a credit history in order get a good credit score, and the scoring system is set up to weigh revolving credit cards heavily.
2. Closing a credit card will boost your credit score. Nope. In fact it could hurt it by reducing the amount of credit you have available. This is especially detrimental if you are still carrying a balance on other credit cards.
3. You will hurt your score by pulling your credit report. When you check your own credit report, your score is not impacted. When you ask others to check your score as you apply for credit, that can hurt your credit score. But when you look at your own credit, you are not penalized, and you can catch errors and fraud.
4. All creditors use the same credit score: Unfortunately, every lender and creditor uses slightly different versions of the basic FICO score. This means that you need to be aware of the criteria that might adjust your score. In fact, different credit scores can vary by as much as 20 points or more.
5. Your income is a factor in your credit score: How much money you make does not affect your credit score. Don’t think that you are safe just because you have a good living and you can meet your monthly payments. Double check your credit score before applying for a loan to make sure it’s in good shape.