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13 credit score myths debunked

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When it comes to qualifying for the best credit cards or even renting an apartment, your credit score matters.

While establishing a good credit score is a vital piece of your overall financial picture, there are many common misconceptions about what does affect your credit score.

Below, CNBC Select asked financial expert John Ulzheimer, formerly of FICO and Equifax, the truth behind 13 of the most common credit score myths. Here’s everything you should know about what makes that magic three-digit number go up or down.

1. Checking my credit score lowers my credit score

False. Though 93% of millennials are aware of their credit score, this is probably the most common myth. Monitoring your score helps you track progress when building credit, but it is important to check it the right way.

Checking your credit score is considered a “soft pull,” which doesn’t affect your credit score. Actions, such as applying for a credit card, which requires a “hard pull,” temporarily dings your credit score.

“If you’re checking it from a legit source, like the credit bureaus themselves, then it won’t hurt,” Ulzheimer tells CNBC Select. “If you have a buddy who works for a car dealership or a mortgage broker, and they pulled your credit as a favor, everyone is going to think you’re applying for credit and the inquiry could lead to a lower score.”

You can check your credit score for free with most card issuers, using apps such as Discover’s Credit Scorecard and Chase’s Credit Journey, which are available to everyone.

Read more: How to check your credit score for free

2. Carrying a balance on my credit card boosts my credit score

False. Carrying a balance on your credit card doesn’t help your credit score, it only has the potential to hurt it and it will end up becoming expensive over time paying interest. Not to mention, it’s a waste of money to pay interest on your balance if you can afford to pay off your credit card bill in full each month.

Lingering balances on your account directly affect your credit card utilization rate. The higher your credit card balance, the higher your utilization rate, which can in turn hurt your credit score.

If you’re already carrying a balance on a credit card, consider transferring it to a balance transfer credit card, such as the Discover it® Balance Transfer. This can help you save money in the long run, if you commit to paying off your balance during the introductory 0% APR period.

3. My income impacts my credit score

False. Your salary and income are considered measurements of your capacity to pay bills, not your potential credit risk.

“Income isn’t even on your credit reports so it can’t impact your score,” Ulzheimer says. “Wealth metrics aren’t considered by credit scoring models.”

While it’s good to know that the size of your paycheck has no influence on whether you have good or bad credit, you should know what does impact your score. Variables include your payment history, amounts owed (utilization rate), length of credit history, new credit (how often you apply for and open new accounts) and credit mix (the variety of credit products you have).

4. A good credit score means you’re rich

False. Credit scores are just a measure of your risk (whether you pay your bills on time and in full). “A good credit score means you’re a good credit risk,” Ulzheimer says. “A low score means you’re a poor risk. That’s all they mean.”

Having a high salary doesn’t guarantee a higher line of credit, but if you update your income with a card issuer to a higher amount, you may see an increase in your credit limit, which could be positive for your credit utilization ratio (as long as you continue to pay your balance in full each month). Also some charge cards, like the American Express® Gold Card, have no preset spending limit, which means there is no assigned credit limit.

5. A perfect credit score doesn’t really matter

True. While it would be fun to say you are in the elite 850 club, there are no additional benefits of having a perfect score. No loan and credit products exist that are only available for people with perfect scores, and once you reach a certain score, you pretty much get all the same benefits anyways.

“If you have a 760 or above, you’ll likely qualify for the best deals on everything,” Ulzheimer says.

6. I don’t need to worry about my credit score until I’m older

False. The minimum age at which you can apply for credit is 18 and that’s when you should start worrying about your credit score. Financial experts recommend young people start building credit as soon as possible. The length of your credit history is a big factor in your credit score, so the sooner you establish credit the better.

For those just beginning their credit journey, check out CNBC Select’s recommendation for the best first credit card. If you’re a student, check out our list of the best cards for college students.

7. Paying off debt increases your credit score

True and false. This is true for credit card debt, but not so true for installment debt, such as a mortgage or student loan. While it is good for your overall financial life to be totally debt free, you won’t see a bump in your credit score if you pay off your car loan, for example. It can actually ding your score because it means having fewer credit accounts. That doesn’t mean you shouldn’t pay off the loan, though; you don’t want to pay unnecessary interest over time just to save a few credit score points.

Because credit cards usually have higher interest rates than installment loans, paying off credit card debt first can help you while also improving your score (if you lower your credit utilization).

8. My employer can see my credit score

False. When it comes to applying for a new job, people often think prospective employers can see their credit score. While they can pull your credit report, the type of credit report that employers have access to does not include your actual credit score.

“It’s not the same type of credit report that your lenders can see,” Ulzheimer says.

What employers do see when they run a credit check is your debt and payment history so they can look for any signs of financial distress.

9. Student loans don’t affect my credit score

False. Your credit score isn’t just impacted by your credit card bills. You need to pay all your bills on time, which includes your utilities, student loans, mortgage and any medical bills you might have.

“Default on a few student loans, and you’ll see just how much student loans affect your scores,” Ulzheimer says.

If you struggle to remember to pay your bills each month, there’s an easy fix: autopay. In the case of student loan companies, some give you a discount on your interest rate if you set up autopay.

10. Getting married will merge my credit score with my spouse

False. When you get married, your credit report stays unique to you and only you. “Credit reports are always individual at the consumer level,” Ulzheimer says.

When it comes to applying for new credit with your partner, such as filling out a joint application for a mortgage, each partner’s credit score is taken into consideration by the lenders. Once a joint loan is opened, the positive and negative actions both you and your spouse take are reflected on both of your reports.

11. Using debit cards helps build a good credit score

False. Debit and credit cards are two entirely different things. Since debit cards are not a form of credit, they never end up on your credit reports and thus have no influence on your credit score.

12. Closing a credit card improves my credit score

False. Closing a credit card will never improve your credit score — in fact, it’s likely to ding your score and that’s one reason experts generally don’t recommend it. But there are some specific circumstances to think about before deciding whether or not to cancel your credit card.

If your card has no annual fee, then there’s really no harm in keeping it open. But if you’re losing money on the card, you can call up the card issuer and ask if you can switch to a no annual fee credit card. If you’re being charged a high interest rate, it might be beneficial to close a credit card.

The Capital One CreditWise app offers a simulator so you can see how taking certain actions (closing a card or paying off a balance) might impact your credit score. This is a good place to start if you’re worried that closing your card might make your score go down.

13. Selecting ‘credit’ while using my debit card for a purchase helps raise my credit score

False. If you choose “credit” instead of “debit” next time you’re at the cash register, know that your credit score will not be affected in any way since your debit card activity does not get reported to the credit bureaus. Debit cards have no effect on your credit history nor credit score, so whether you use your debit card as debit or credit, the money is still withdrawn directly from your checking account.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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Warner Robins GA Credit Repair Finance Score Improvement Service Launched

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New credit repair services have been launched by the expert team at Fresh Start Consumer Services. They work with clients in Warner Robins, GA and the surrounding areas.

New credit repair services have been launched by the expert team at Fresh Start Consumer Services. They work with clients in Warner Robins, GA and the surrounding areas.

Fresh Start Consumer Services has launched a new credit repair service for clients looking to improve their financial future. Interested parties can sign up for credit consultations, in-depth credit analysis, credit recommendations and more.

Full details can be found at: https://freshstartconsumerservices.com/index.html

The newly launched services are designed to ensure clients can repair bad financial credit history, track their improvement campaign in measurable ways, and secure a better future for themselves and their family.

Clients can work with Fresh Start Consumer Services to clean up their past. This is achieved by working with the major credit bureaus and creditors to challenge the negative report items that affect the credit score.

Based in Warner Robins, GA, the expert team at Fresh Start Consumer Services is passionate about helping citizens to improve their credit score to give them more buying power. As a result of this, clients are able to secure more options in life.

The team understands that sometimes bad things happen to good people, and their services are designed to ensure that clients can get the most out of life. They also realize that a bad credit score can harm clients’ quality of life – and can be a difficult situation to get out of.

Fresh Start Consumer Services offer courses in credit repair and restoration, budget management, credit education and purchase assistance. Clients get easy access to their account 24/7 for live status updates on improvements, allowing them to fine-tune the management of their credit score.

Service options include personalized dispute options to fit each clients’ exact credit repair needs, an experienced case analyst and case advisor working personally with them throughout the process, custom dispute letters, and more.

For clients, there are a number of reasons to work with a credit repair specialist. Clients are able to secure significant savings on interest rates, attain better terms on loan products, and get access to the best credit card deals. They also gain access to more housing options.

The team states: “Fresh Start Consumer Services offers a unique combination of services that gives our clients the quality of life they deserve. We specialize in helping our clients achieve qualifying credit and the financial health they desire.”

Full details can be found on the URL above.

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Is it Possible to Trade In a Car Early?

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Yes, early trade-ins are possible when you finance a vehicle. In fact, there’s no set time frame on trading in a car. Most dealers won’t take a trade-in that’s too fresh, though, and it’s best to wait until there’s equity in your vehicle before you try to trade it in.

What’s a Trade-In?

When you trade in a car, you’re essentially selling it to a dealership and financing something else from their lot, without the hassle of selling and buying with separate transactions. There are no hard-and-fast rules about how and where you have to trade in your vehicle.

However, it’s beneficial to shop around and see which dealers can give you the best price, but you shouldn’t just head to a car lot and ask what they’re willing to offer you. When the time comes, there are several steps you may want to take to get ready for the trade-in process, especially if you’re looking to trade in early before you’ve had the chance to close the equity gap.

Trading In Early and Equity

Are Early Trade-Ins Possible When You Finance a Car?When you’re trading in a vehicle soon after you’ve financed it, you’re more likely to be in a negative equity position – owing more on your auto loan than the car is worth.

This is especially true if you financed a new vehicle, or a certified pre-owned car. Newer vehicles depreciate faster than used ones, which have typically already seen their biggest drop in value.

Depreciation is the loss of value over time and it can’t be stopped. It can be slowed, though. The best way to do this is by using a large down payment when you finance. This reduces the amount you have to borrow, and leaves you owing a price closer to what the car might cost after you drive it off the lot. New vehicles typically lose around 10% of their value as soon as they touch the road.

If you don’t have the equity to recoup your investment in a car, you have to make up that difference out of your own pocket. It’s much easier to trade in a vehicle that can pay for itself, but this isn’t always possible when you’re trying to do so early.

Preparing Your Early Trade-In

When you know that you’re starting with a deficit on your trade-in, it’s a good idea to be prepared to get the most you can. Clean the car thoroughly, both inside and out, and make sure to fix any minor damage that may have occurred in the short time since you took out your loan.

Getting the vehicle detailed and fixing major mechanical issues isn’t likely to result in a worthwhile increase to the cash in your pocket, so don’t go overboard. Remember, you want to make as much money on this trade as you can, and it’s probably cheaper for the dealership to fix any large issues.

Before you set foot in a dealer to get your trade-in appraised, it’s a good idea to know approximately how much your car is worth. You can find this out by going to online valuation sites such as Kelley Blue Book or NADAguides. Be sure to be honest when you’re inputting information, since it’s the only way to get an accurate estimate of possible value.

Shopping for Trade-In Values

Once you have the estimates (which you should print or save to your phone), it’s time to take your trade-in to get looked at. Taking it to a few different dealerships is a good way to find the best deal you can.

We recommend taking your early trade-in to at least three different dealers, making sure at least one of them is a franchised dealership that sells your vehicle’s brand. A franchised dealer that sells your car’s brand may be more likely to offer a higher price.

Depending on your credit situation, it’s likely a good idea to ensure you’re trying to trade in your vehicle to a dealership that can work with your situation, especially if you have poor credit. And that’s where Auto Credit Express can come in handy.

We have a nationwide network of special finance dealers that are signed up with subprime lenders who can help people in many different types of credit situations, including bad credit, no credit, and even bankruptcy.

The process is easy to get started – just fill out our free auto loan request form. We’ll match you to a local dealership that can get you started on the financing you need after your early trade-in.

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Jackson receives financial reporting award

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JACKSON, Mich. (WILX) – The City of Jackson is getting international recognition for its transparency in financial reporting.

The Government Finance Officers Association of the United States and Canada (GFOA) awarded the Certificate of Achievement for Excellence in Financial Reporting to Jackson for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30, 2019.

The CAFR was judged by an impartial panel to meet the high standards of the program. Standards include demonstrating a constructive “spirit of full disclosure” to clearly communicate the financial story of the City and encourage users and groups to read the CAFR. The Certificate of Achievement is the highest form of recognition in the area of governmental accounting and financial reporting.

“This is great for the City as a whole because it improves our bond rating,” said City Manager Jonathan Greene. “We believe this award will help our residents understand the work we do to make the City’s finances transparent and easy to understand.”

Bond Ratings are letter grades assigned to bonds that indicates good or bad credit for an entity like the City of Jackson. By having a strong bond rating cities are granted opportunities to pay back interest at lower rates.

The CAFR can be viewed HERE.

Copyright 2020 WILX. All rights reserved.

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