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Last Updated: 4/16/2014 09:56 PST

Which of These 3 Credit Score Myths Are Costing You Money?

Which of These 3 Credit Score Myths Are Costing You Money?

If you are like most Americans, it isn't until you think about purchasing a car or home that you worry about the health of your credit score. While this is the norm, experts suggest that failing to understand the basics of your credit score can be a costly mistake.

According to the Consumer Federation of America (CFA), more than half of Americans are significantly misinformed as to how credit scores are calculated. For example, many think that age plays a factor in the calculation of their score -- when actually it doesn't play a role whatsoever.

The following are the three top credit score myths that can ruin  your credit score:

1. Debt Is Bad for Your Credit.
The truth is that carrying a reasonable amount of debt and making payments on time will boost your credit score.

While it may seem strange that you are rewarded for carrying debt, the major credit bureaus like to see that you are diligent about making payments on-time.  If you never carry any debt, creditors don't have any benchmark for your reliability.

Before you can determine what you need to do to improve your credit score, you should pay attention to factors that may be affecting its health. Thankfully, there are some great free online resources that you can access right now to check your credit score and review you liabilities, loan balances, interest rates, mortgage information, and more.  

One of the very best is Credit Sesame — and not just because they let you create a free account — you can also monitor your credit score 24 / 7 and even pre-quality for loans should you need one in the future.

2. My Spouse's Credit Score Helps Mine
This logic is completely flawed. Your credit score is completely independent of your spouse.

If you are married, it is vital that you both know what your credit scores are and make a concerted effort to raise them if needed. Applying for your free credit score will reveal the facts surrounding both of your financials.

The more you know, the more confident you can be as a couple when applying for loans or credit cards.

3. No Bankruptcy = An Excellent Credit Score
Just because you haven't filed for bankruptcy or had any legal action taken against your earnings or finances, doesn't mean your credit score is exceptional.

Most individuals start in the 600s as young adults and then gradually crawl toward 850 (the "excellent" range). The process of growing your credit score requires that you make a commitment to paying all of your bills and loans on-time —see point #1, above — and failure to do so can dramatically drive your score down.

Other factors that can reduce your credit score include:

 - High credit card utilization (or the percentage of each credit line you are using)
- A short credit history
- A bland credit mix
- Missed mortgage or car payments

It is your responsibility to maintain a healthy credit score. This means continually monitoring your credit score and taking proactive steps to making improvements. The fastest, easiest, and cheapest way to accomplishing this is through a company like Credit Sesame; their free account and easy-to-read format gives you a wealth of information on your current financial situation.

Click here to view your credit score for free and begin taking control of your financial destiny!

This article sponsored by Credit Sesame Copyright Howlifeworks.com 2014