As an individual who works in the financial world, it now becomes a lot more easier to understand how money floats globally and especially in America, how credit scores work. I remmember back in my younger days when i will apply for a credit credit card, not knowing how it worked totally, only to make numerous and unecessary charges which came back to haunt me down the line. At a young age, having a credit card and not the money to pay for your ending balance at the end of the month can put you in a deep hole filled with troubles and this is exactly what happened to me. Renting cars, going out to eat, going to the movies were all part of my credit card enjoyments. I figured since the money was not coming directly out of my pocket, then i can sustain to use my plastic card as a means to get whatever i wanted. Now of course in the long run, my card ended up being charged off due to my inability to pay for it. Being a little older and knowing what i know now i can attest to you that the same mistake will not happen again.

With the arrival of the new year and the economy still shaky, interest rates on any and all types of loans should be very attractive, that is if you are looking at the right place. My advice is to never go with big banks as they will still charge a higher rate simply based on it’s name and brand. I highly recommend credit unions if you’re going for a large purchase such as an auto loan, mortgage, credit cards or even personal or students loans as their interest rates will be a lot lower than their competitors. Of course applying for any type of loan will bring you face to face with your credit score; a number between 300 and 850 that determines how good of a borrower you really are. In general, the higher your score, the lower your interest rate may be on a loan product. But the world of credit scoring can be quite confusing with misconceptions about what actually impacts your score. If you plan to boost your score this year with the hopes of taking advantage of super low rates, take into account these popular credit score myths as follows.

Myth #1: Closing a card after paying off a massive debt load.

While it may feel good to kiss that card goodbye, it’s certainly not a smart move. Closing a credit card account may actually increase what’s known as your debt-to-credit ratio, which is the sum of all your outstanding credit card debt divided by the sum of all your credit card limits. A higher ratio is considered risky by credit score calculators and can potentially drag your score in the downward spiral direction. To earn the highest score, try to use no more than 10 percent of all your available credit.

Myth #2: Your employment history impacts your score.

This is false, yet more consumers believe having a steady job track record improves a credit score. Of course it is the ultimate factor that having a job helps you to qualify for a loan, but it’s not factored into your credit score.

Myth #3: Financing a big purchase will lower your score.

This is not true at all. Your score won’t simply be affected for taking on a new loan like a mortgage or car loan. Actually, having a variety of loans and managing them responsibly can help boost your score. In fact, about 10 percent of your FICO credit score is dependent on the “types of credit used.”

Myth #4: The older you are, the higher your score.

This only applies if you have a long standing history of making timely payments which is associated with the age of your credit score but not simply on the age of the borrower. The important thing to note is that the earlier in life you establish credit and, again, manage it responsibly by paying your bills on time and having low balances, the better for your score in the long run.

Myth #5: Checking my score will lower my score.

I hear this misconception all the time however the truth is, looking up your own score yourself is totally harmless. In fact, it’s recommended that you check your scores yearly from each of the three major credit reporting agencies: Experian, Equifax and TransUnion. if a lender or credit card company checks your credit score, it may work against you if you have multiple financial institutions checking your credit. One exception is if you’re shopping around for a mortgage or car loan and receive multiple credit inquiries from lenders within a short time frame. All the inquiries in this case will typically count as just one inquiry and should do little to no harm on your credit score.

You are more then welcome to share some of the myths you know.