Common Credit Score Misconceptions
Written by Alex Bach
For many consumers out there, the credit score remains a mysterious and sometimes elusive thing to comprehend. We don’t know exactly how the scores are generated, where they come from, or how they really effect our lives. Not to worry, we at Credit Report Problems will set you straight.
And if after reading this you believe there might be an error on your credit report (which can happen to up to 70% of consumers) here’s how to fix your credit report errors.
Common Credit Score Misconceptions:
Checking Your Score Lowers Your Credit:
Everyone is allowed one free credit report every year. However, checking your credit score outside of that annual checkup doesn’t hurt your score. Reviewing your own scores counts as a “soft pull” and not an attempt to secure a loan, called a “hard pull.” Hard pulls will lower your score, soft scores won’t.
A Miss Is a Miss:
It doesn’t matter if you pay your monthly car pay but miss your $15 credit card payment. Amounts are not taken into account when calculating your scores. As the score is based on your credit history, it looks for when payments are made, and when they aren’t.
Cosigning Is a Free Pass:
No. Just because someone was willing to put their name with yours on a loan or account does not mean one of those people is exempt from having the activity of that account negatively affect their credit score. Both parties are responsible for the account, therefore both parties receive a credit score.
Closing Old Accounts Will Boost Your Score:
There was an idea started a long time ago that in order to raise your credit score all you had to do was close your credit accounts, sometimes taking out a new account to do so. This is just not true. Paying off the debts will raise the score but the closing of the accounts is a red flag of sorts. The length of your credit history plays into your account and closing it down cuts that history short.
There’s Only One Type of Credit Score:
Nope. You’ve probably heard of the big three credit reporting bureaus (TransUnion, Experian, Equifax), well each of them has a different credit score for you. That’s because every one of the bureaus is only charged with collecting your credit history and manufacturing a score from there, and every bureau has different collection and recording practices. The important thing to remember when assessing your credit isn’t the score, the number, but the proposed risks of your account.