6 Myths about Credit Scores

6 Myths about your credit score

When it comes to credit scores and FICO scores there is a lot of confusion about what actually impacts one’s ability open a credit card, finance a car or purchase a home.

Myth 1: Your credit score drops if you check your own credit.

Truth: Viewing your credit report counts only as a “Soft Inquiry” and doesn’t change the score. “Hard Inquiries” by a lender or creditor, can slightly lower your credit score.

Myth 2: You should close old or inactive accounts to help your credit score.

Truth: Closing accounts may actually have the reverse effect of lowering your credit score because it can shorten the measured duration of your credit history.

Myth 3: Paying off a negative record means it’s taken off your credit report.

Truth: Generally, negative records like collections or late payments will remain on your credit report for up to 7 years.

Myth 4: Cosigning doesn’t mean you’re responsible for the account.

Truth: If you open a joint account or cosign a loan, you will be held legally responsible for the account, meaning activity on the joint account is displayed on credit reports of both account holders.

Myth 5: Making on-time rental, utility and cell-phone payments helps my credit score.

Truth: While outstanding rental, utility and cell-phone debt that have gone to collections and can negatively affect your score, generally, on-time payments are not regularly reported to credit bureaus.

Myth 6: Your credit score reflects changes or trends in your payment behavior

Truth: Historically, credit scores have not incorporated trended credit information, meaning they are a moment-in-time glimpse at consumer risk.

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