8 Credit Score Myths

I want to share some myths and facts I’ve learned while attending a personal finance seminar I recently attended in the New York City:

Myth: I only have one credit score.

Fact: In fact, you have three credit scores, one from each of the three major credit bureaus. These scores can vary by as much as 50 points or more. This is why it's a good idea to check all three.

Myth: Checking my own credit lowers my credit score.

Fact: You can check your own score as many times as you want without impacting your score, but make sure you do so via the bureaus or a legitimate score seller like MyFICO.com or annualcreditreport.com they can provide you with a detailed report with information from three major credit bureaus: TransUnion, Equifax and Experian.

Myth: Your age, income and sex are factored into your score.

Fact: According to Fair Isaac, none of this information has any bearing on your score. Your employment is something that is listed on the credit bureau report, but doesn't affect the score itself.

Myth: A higher job salary will improve my score.

Fact: Paying off your debts will improve your score. Earning more money, winning the lottery or inheriting a fortune, however, will not because, your net worth and income are not factored into your score.

Myth: To remove inaccuracies just dispute it.

Fact: If there is information in your report that is legitimately inaccurate, you should by all means dispute it. Credit agencies are obligated to investigate credit inaccuracies within 30 days or remove disputed information. You have the right, under the Fair Credit Reporting Act, to dispute any erroneous information or inaccuracies in your credit profile. Sites like creditdemystified.com help clients with free tools such as credit repair and home loan guides, debt-consolidation workbooks, and several podcasts on how to remove information and improve credit ratings.

Myth: Shopping around for a loan hurts your score.

Fact: Multiple applications can have a devastating effect on your score, especially around the time you are shopping for major purchases like a car loan or mortgage. While it's true that too many inquiries to your credit will lower your score, you absolutely can shop around for a mortgage, home equity loan or car loan without worrying about damaging your credit.

Myth: Credit card offers can lower your credit score.

Fact: Credit card solicitations, while annoying, don't affect your score. That's assuming you don't respond to the solicitations and use all of the credit that's available to you. There is no magic number for how many credit cards are too many, according to the Fair Isaac website. But, if ratio of credit used to credit available is high, that indicates higher risk.

Myth: When you get married your credit scores become combined.

Fact: There is a misconception that when people get married your credit information gets mixed, but, your personal profile whether good or bad credit is yours and yours only 'til death do you part. When you open accounts jointly, though, that information will be reflected on each of your credit reports, for better or for worse.

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