3 On Your Side: Credit Score Misconceptions
By Jim Donovan
PHILADELPHIA (CBS) -- Having a good credit score these days is very important. But do you even know what goes into your score? 3 On Your Side Consumer Reporter Jim Donovan finds that many people are confused on how to achieve a high score.
Getting approved for a credit card, car loan or home mortgage depends on a credit score. Often that's a 3 digit FICO score that generally ranges from 300 to 850 and most people know the basic rules for keeping it high. But Bankrate.com credit card analyst Jeanine Skowronski says there are many misconceptions. According to Skowronski, "A lot of nuances that are involved in credit scores are lost on consumers."
In a new poll 55 percent of Americans thought they had to carry a balance on their credit card and pay interest to improve their credit score. Skowronski says, "You don't have to do that at all. simply having the card and using the card responsibly will help you build credit over time."
And 70 percent of those polled were surprised to learn that having just one type of credit account can hurt you as well. Skowronski says, "Credit score models are designed to reward people for having different types of loans."
Skowronski says the most important rule - don't miss a payment. She says, "You're going to risk losing 70 to 90 points for a first missed payment so that's something that you don't want to do."
Finally, while getting rid of a credit card might keep you from spending too much, it could damage your credit. Of 1,000 people surveyed by Bankrate.com, 76 percent didn't know that closing a credit account can actually lower your score.
