Exposing Top 10 Credit Myths

Although people are very aware about credit reports and score, there are still a lot of credit myths doing the rounds. While most of them have been busted and exposed for what they are, people still believe them. Unless people are more aware and knowledgeable about credit reports and credit scores, these myths will probably continue to live:

Myth 1  Your credit score is hurt when you check your credit report. This is as far from the truth as it possibly could be. Some people with half knowledge of ‘hard inquiries’ believe and thus, spread the myth about your credit score being harmed if your check your Credit Report. It is only when lenders et al pull up your credit report in response to your application for loan or mortgage et al, that it is counted as a hard inquiry.        

Myth 2 Personal information such as age and income does not appear on credit report. This is another myth that must be laid to rest. All personal information about you like you name, age, social security number, date of birth, income, residential address et al appears on your credit report.

Myth 3 Your Checking and Savings Account and your ATM card your affect credit report. Contrary to common perception, these do not affect your credit report and score in any way.

Myth 4 Your credit report from all the 3 bureaus should be the same. When you pull out your credit reports from all the 3 bureaus, you will observe that they are very different from each other. An item that is reported in the report from Equifax may or may not appear in the other two reports from TansUnion and Experian. This is because lenders choose to report to the bureau that they wish. They are not under any compulsion to report to all the three bureaus or for that matter to either of the bureau.

Myth 5  It is impossible to get a score of 850. It is a difficult task to get a score of 850 but not impossible. You will need to maintain a perfect credit for at least 15-20 years to achieve this score.

Myth 6 Repaying collection account gets them removed from the credit report instantly. Even though you may repay any outstanding debt of collection, they will remain in your credit report for 7 years from the date of last payment.

Myth 7  Close Old accounts and credit cards It is never a good idea to close old accounts and credit cards as they add to your credit score. They affect your credit age and limit.

Myth 8 Too many loan applications can ruin your credit score. This is not true. Inquiries account for only 10% of your credit score.

Myth 9 Short Sale is better than Foreclosure Whether it is a short sale or foreclosure, both have equally negative impact on the credit score. Therefore, avoid both.

Myth 10 Credit cards can be used in any manner if you repay bills on time. Your credit cards are an important part of your credit history, report and score. Use them wisely. The golden rule says that your credit card should not be maxed out and you should repay the bills timely.

There are many other credit myths but these seem to be the most popular and so it was essential to lay them to rest. If you hear of any other credit myth, consult a credit expert who can inform you about the accuracy of the statement.