Your attitude toward your finances and credit can lead you down a path of destruction.

Many people do not realize that their credit and financial situation go hand in hand.

The article that I reference below goes into detail about having the wrong perception of your credit and finances can leave you in ruins.

"Credit scores are important, but having great scores doesn't mean you're doing everything right.

You can be a multimillionaire with no credit score, or someone with excellent scores who's on the brink of a financial meltdown".

Source MSN Money – Great with credit, lousy with money

There are 3 myths discussed in this article.

Myth #1 Credit Scores don't matter.

The truth is that your credit score matters in every aspect of your life.

The interest rate that you pay on mortgages, car loans, and credit cards.

Your insurance rates you pay are determined by your credit score.

Some employers are now looking at your credit report to determine whether to hire you for their company.

The article says that you don't need to have a car or mortgage loan on your credit.

I do not agree.

You do need a variety of credit in order to maximize your credit score.

10% of your credit score is made up of the type of credit used according to MyFico.com.

Myth #2 Great finances make great credit scores.

False!

Your credit score determines your risk of default for the lender.

The credit formula:

Payment history, available credit, length of credit history, new accounts, and variety of credit used.

The following are not used to determine your credit score: income, net worth, retirement accounts, investment returns, employment, living within your means or paying off your credit cards each month.

Paying for everything with cash will not help you build credit. 

It will cause you to have a low or no credit score.

Lenders do not care if you do not fully know how the credit system works.

Myth #3 Great credit scores make great finances.

False!

Your credit score does not determine your overall financial picture.

Having a great score does not mean your finances are sound.

To much debt can come back to hurt you if your hours at work are cut back, lower credit limit, or higher interest rate.

Limiting the amount of debt you incur is the best way to keep yourself out of finance ruin.

Knowing the basics of the credit model can help you gauge how to use your credit.

Payment History 35%

Amounts Owed 30%

Length of Credit History 15%

New Credit 10%

Types of Credit 10%

There three important things that you can do to have a great credit score.

Pay your bills on time.

Use less than 40% of your credit card limits.

Avoid getting unnecessary credit.

These are just 3 credit myths that have been debunked.

Make sure that you are not basing your credit on a myth!

What credit myths are you living by???

Your financial coach,

Renee Lawson

Recommended Resources:

P.S. Did you know there's one amazingly simple thing you can do right now to increase your credit score? My new video show your how FREE: www.totalprosperityclub.com.

New Book Coming: www.sexliesandcredit.com.