Explore the Mortgage101 Library
Check Local Mortgage Rates
Loan Program Choices
Use our calculator to find out your estimated monthly payment in advance: Enter the loan amount, interest rate, and length of mortgage.
Try our Mortgage Payment Calculator
There are a number of credit myths that get spread around that many people mistakenly believe. Here are some of the most common credit myths that you might have heard before.
1. Making A Lot Of Money Will Help Your Credit Score
Many people mistakenly believe that if you make a lot of money, you are going to be able to improve your credit score. While this might sound reasonable to certain people, this is not true at all. Your income has nothing to do with your credit score. There are people that make hundreds of thousands of dollars per year that have terrible credit scores. At the same time, there are people that are completely broke that have wonderful credit scores. Credit scores are based on how you handle your credit and pay your bills. Therefore, if you make more money, it is not going to help your credit score at all.
2. Paying Cash for Everything Will Help Your Credit Rating
Many people believe that paying cash for everything is going to somehow help your credit. While it will keep you out of credit card trouble, it is not going to do anything to help your credit. In order to improve your credit, you have to actually use it. If you do not use your credit, it is going to dry up. You have to continually make purchases on credit and pay for them in a timely manner. For example, if you were to make one or two purchases on your credit card and then paid off the balance in full every month, this would help your credit score. If you make those same purchases with cash, the purchases would not be reported to the credit bureaus and your credit would not improve at all.
3. A Divorce Decree Will Absolve You of Your Credit Responsibilities
You might also have heard something about if you get a divorce, you do not have to worry about your credit responsibilities anymore. While this might sound attractive, it could not be further from the truth. Many people that get divorces end up getting their credit damaged even worse than it was before. If you open any type of account with your spouse before you were divorced, you could run the risk of damaging your credit with that account. For example, if your spouse continues to get the bill for a credit card that you both had but they do not pay it, this is going to impact your credit just as much as it does theirs. When you get a divorce, you should make sure that your name is taken off of all of the joint accounts, the mortgage, the car payment, the credit cards, and anything else that you owned together. If you do not take the necessary steps to do this, you could potentially ruin your credit even if you continue making your monthly payments on the bills that are yours.
- Second Mortgages: Advantages and Disadvantages
- What To Do When Mortgages Default
- How to Get Approved for an FHA Loan despite Bad Credit
- 3 Factors that Can Negatively Affect Your Mortgage Application
- Appraisal Basics
- FHA Loans for a First-Time Home Buyer
- Alternatives to Getting a 2nd Mortgage
- FHA Eligibility with Bankruptcy and Foreclosure
- What Lenders Don't Reveal About Home Equity Loans