8 Credit Score Myths
Posted on September 21, 2007 in the Credit category
.Your credit score, or FICO score, is arguably one of the most important pieces of information in your financial life. Lenders, landlords, insurers, utility companies and even employers scrutinize this rating — which sums up all of the information in your credit reports with three digits ranging from 300 to 850.
With so much importance associated with a number that very few people understand, it is no surprise that some urban myths have grown up around credit scores. Recently CNNMoney.com put together a list of the biggest 8 credit score myths and CNNMoney interviewed Ryan Sjoblad, a spokesman for Fair Isaac about these myths.
You only have one credit score.
In truth, 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,” said Sjoblad. This is why it’s a good idea to check all three.
Checking your own credit will lower your score.
You can check your own score as many times as you want without impacting your score, said Sjoblad, but make sure you do so via the bureaus or a legitimate score seller like MyFICO.com rather than, say, at a car dealership.
Your age, income and sex are factored into your score.
According to Sjoblad, none of this information has any bearing on your score. Your employment is something that is listed on the credit bureau report, he added, but doesn’t affect the score itself.
A higher salary will boost your score.
Paying off your debts will improve your score. Earning more money, winning the lottery or inheriting a fortune, however, will not because, again, your net worth and income are not factored into your score.
To remove unfavorable info just dispute it.
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.
Shopping around for a loan hurts your score.
When you apply for a loan or get pre-approved the creditor checks your credit report, which shows up as an inquiry to your credit. 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, said Sjoblad. “As long as the same kind of inquiries are made within 14 days of each other, they count as one inquiry on your credit score,” he said. Take note: This grace period doesn’t apply to credit cards.
Credit card offers are hurting your score.
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, said Fair Isaac’s Cheri St. John. But, if ratio of credit used to credit available is high, that indicates higher risk. “Clearly consumers want to keep balances below the available credit line,” she added.
When you get married your credit scores are merged.
“People think once you’re married your credit information gets mixed,” said Sjoblad. But, your 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.
I think at one time or another we have all heard of many of these myths. It is good to finally know what ones are right and what ones are truly myths.
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