8 Myths About Your Credit Score

  • Myth 1: You don't need to check your credit report if you pay your bills on time
  • Myth 2: You need to carry a credit card balance to have a good score
  • Myth 3: You should never close an account if you can help it
  • Myth 4: Too many inquiries hurt your credit score
  • Myth 5: Checking your own credit report hurts your score
  • Myth 6: All credit reports are the same
  • Myth 7: Negative entries come off in seven years
  • Myth 8: You only have one credit score

Myth 1. You don't need to check your credit report if you pay your bills on time

Fact: You should check your credit report once a year at a minimum

It has been found that 80 percent of all credit reports have missing and or erroneous information ranging from a wrong birth date to accounts you never applied for.

Myth 2: You need to carry a credit card balance to have a good score

Fact: You don't need to be in debt or pay any interest to have good credit scores.

Your credit reports and scores don't "know" whether you're carrying a balance or paying it off in full every month. That's because the balance reported to the credit bureaus typically is the balance from your last statement, not what was left over after you got that statement and paid the bill. So you might as well pay in full and save yourself the interest

Myth 3: You should never close an account if you can help it

Fact: Closing accounts probably wouldn’t improve your scores but may hurt your scores.

If your credit card account is charging you a fee you don't want to pay, closing a card or two shouldn't have much impact if you have good scores if you have open accounts and no plans to apply for credit in the immediate future. If you plan to apply for a mortgage, car loan or new credit card, though, you should hold off on closing any accounts until after you've been approved.

Myth 4: Too many inquiries hurt your credit score

Fact: Loan inquires made within a 30 day period are counted as one

If a series of mortgage or car loan inquiries are made within 30 days, they are counted as one. After that period if another series of inquiries are made within a 30 day period for a mortgage or car loan in the next 6 months, it is assumed that the borrower is still looking for the same loan.

Myth 5: Checking your own credit report hurts your score

Fact: There is no affect on your score when checking your own credit report

Just be sure that you go directly to the three credit reporting bureaus for your credit report. Companies offering free credit reports as a side benefit may not report the inquiry as a soft pull

Myth 6: All credit reports are the same

Fact: Each of the three major credit agencies maintains their own credit report information

Rarely do credit reports from the three major credit reporting bureaus contain the same information. Each agency receives what is reported to them and also update this information at different times

Myth 7: Negative entries come off in seven years

Fact: Some but not all negative entries are removed after seven years

Chapter 13 (reorganization of debt) disappears seven years from the filing date. But if you filed Chapter 7 bankruptcy (exoneration of all debt), the information remains 10 years from the filing date. If you pay off or close an account that had no delinquencies or problems it remains on the record for 10 years which is to your advantage

Myth 8: You only have one credit score

Fact: Each credit reporting agency calculates a credit score for you, and they aren't always the same

All of the major credit bureaus, (Experian, TransUnion, and Equifax) use the same criteria to judge your "credit worthiness" and often come up with similar scores, they can vary because they have different information and may analyze it slightly differently.