Crazy credit score myths
While you have access to more credit score information than ever, there's a lot of misinformation and outright mythology floating around, too. Several myths rise to the level of hype and can be scary. Have you heard that your race, gender, age, job type, or neighborhood go on your credit? They don’t and they certainly don’t factor into your score.
Here's what else not to believe about your credit score.
Prospective employers check credit scores.
While they can review your credit report as part of your application, it's illegal for them to pull your credit score. Any employer must get your permission first, however.
Checking your credit hurts your score.
It's true that each time a creditor runs your credit, you lose a few points. But, checking yourself does nothing but help you manage your credit carefully (as long as you’re not going through lenders to run the check). In fact, you should review your credit report routinely to correct mistakes.
Shopping for a better mortgage rate majorly affects your credit.
When applying for a mortgage, it’s in your benefit to shop around, and the credit bureaus agree. As long as the lenders submit their credit checks within the same two-week period, your credit score will only show the effect of a single credit check.
Credit reporting agencies can decide what to include in your credit report.
Credit bureaus simply collect and house loan and payment information. Lenders report your loan activity to the bureaus., and these agencies have a legal obligation to report what's accurate, but they don't add information themselves.
Getting a bad credit score takes a long time.
While it can take a long time to build a good credit score, damaging it can occur quite quickly. A single misstep in your payment history can cause years of a lower-than-average credit score. If you’ve skipped payment for six months or more, your account will be charged-off. That means the lender writes it off for tax purposes. It doesn’t mean you don’t have to pay; in fact they can still come to your for full payment. Worse, it’s seriously damaging to your credit score.
Closing credit accounts improves credit scores.
Closing credit accounts actually can hurt your credit score. Because a portion of your credit score is determined by credit utilization, i.e., the combined balance of your credit cards divided by the combined limit of the same cards, it’s best to keep your accounts open, whether you have a balance on them or not.
Understanding what’s fact versus fiction is one component that will help you improve or simply maintain your credit score. If you’re interested in learning more about credit and debt, read these other posts: