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What Affects Credit Scores? 7 Misconceptions

Article by Gwen Moran

If you’re trying to work out how to raise your credit score to get a good rate for a refinance or HELOC, you might be

More money improves your credit score

False. Your level or sources of income don’t affect your credit score, although lenders may look at it when making loan decisions, according to the Fair Isaac Corp., the company that issues the commonly used FICO credit scores. You can actually build credit with a loan known as a credit starter loan which is helpful to show lenders that you’re a reliable borrower.

Ownership of several credit cards can hurt your credit score

Mostly false. Having many credit lines isn’t necessarily a bad thing, says credit expert Liz Weston, author of Your Credit Score. Multiple lines give you a favorable debt-to-available-credit ratio. But use them correctly: It’s best to keep any balances below 10% or 20% of the total credit line, she says. Anything more will affect the ratio of debt-to-available-credit, which can decrease your credit sco