5 Myths About Building Your Credit You Should Ignore

5 Myths About Building Your Credit You Should Ignore

Published On: September 3, 2022|Categories: Blog, Buyers, Home Buyers|Tags: , , , , , |

5 Myths About Building Your Credit You Should Ignore

It’s hard to believe in an era where you can get a mortgage with no money down, but some people still cling to old-school myths about building credit. Here are five of the most common myths, and why you should ignore them if you’re trying to buy a home in Jasper.

5 Myths About Building Your Credit You Should Ignore

Check out these five common credit-building myths:

  1. You have to use a lot of credit to build up your score
  2. You should close your credit cards after they’re paid off
  3. It’s okay if you make a late payment thanks to grace periods
  4. You should always add your spouse to your accounts
  5. You should pay a credit repair agency to boost your score

Here’s a closer look at each.

Credit-Building Myth #1: You Have to Use a Lot of Credit to Build Up Your Score

You may have heard that you should carry a balance on all your credit cards, but that’s simply not true. In fact, you don’t need to use your credit cards at all to build up your credit score.

Paying your bills on time – including utility bills, rent, and other debts – is one of the best ways to improve your credit score. So even if you’re not using your credit cards, you can still build up your credit by making sure you’re paying all your bills on time, every time.

Related: How much does a home appraisal matter?

Credit-Building Myth #2: You Should Close Your Credit Cards After They’re Paid Off

Once you’ve paid off your credit cards, it may seem like a good idea to close the accounts to avoid temptation. But closing your credit card accounts can actually hurt your credit score.

That’s because one of the factors that goes into your credit score is your credit utilization ratio, which is the amount of credit you’re using compared to the amount of credit you have available. So if you close a credit card with a $5,000 limit, your credit utilization ratio will go up, which could hurt your credit score.

Related: 5 big red flags to watch for when you’re touring homes for sale in Jasper

Credit-Building Myth #3: It’s Okay if You Make a Late Payment Thanks to Grace Periods

If you have a grace period on your credit card, you may think it’s okay to make a late payment every now and then. But the truth is, even one late payment can hurt your credit score.

And if you’re trying to buy a home, even one late payment could jeopardize your mortgage application. If you’re working on building your credit, it’s important to make all your payments – including credit card payments – on time, every time.

Credit-Building Myth #4: You Should Always Add Your Spouse to Your Accounts

If you’re married, you may think it’s a good idea to add your spouse to all your credit accounts. But that’s not necessarily the case.

In fact, if you have a good credit score and your spouse has a bad credit score, adding them to your accounts could actually hurt your credit score. It’s often best to keep your accounts separate.

Related: Do you really need a home inspector?

Credit-Building Myth #5: You Should Pay a Credit Repair Agency to Boost Your Score

There are plenty of companies out there that promise to boost your credit score, but the truth is, you don’t need to pay anyone to do it. There are plenty of things you can do on your own to improve your credit score, like paying your bills on time and maintaining a good credit utilization ratio.

If you’re trying to buy a home in Jasper, don’t let these myths about building your credit stop you from achieving your goal. With a little effort and patience, you can improve your credit score and get your mortgage.

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Popular Jasper, Indiana Home Searches:

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This 1921 built home boasts 3 oversized bedrooms and 2 full baths.  Enjoy the modern comforts with new flooring and carpet throughout , while the updated  kitchen, complete with appliances beckons that family to join together in the large dining room. The convenience of the laundry room located on the main level offers a large space.  The pantry off the kitchen is also oversized. Home has a beautiful staircase. Freshly painted rooms makes this home move-in ready for the next owner. One car garage is a bonus.  Basement provides extra storage space. $179,900 Active

1441 Vine Street Jasper, Indiana

3 Beds 2 Baths 2,026 SqFt 0.159 Acres

Listing courtesy of Brenda Krempp from RE/MAX Local.

4 bedroom, 2 bath home on a large corner lot.  Loads of potential with some TLC. The main floor has 1 bedroom and bath as well as kitchen and living areas.  This home could even be made into a 2 dwelling residence with some work.  There is an outside entrance to the second floor that currently has 3 bedrooms and a full bath.  There is a fenced yard as well as a detached garage and 2 other out buildings. The basement does get wet with heavy rain but there is a functioning sump pump.  The central AC does not work, the current owners use window units.  Furnace, water heater, and roof are all 3 years old. Sale includes refrigerator and electric stove. this property is being sold "As Is". $100,000 Back on Market

414 E 1st Avenue Huntingburg, Indiana

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Listing courtesy of Joanie Troutman from Key Associates Signature Realty.