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Common Myths about Credit Score

By Sadiya Anjum


Many people remain ignorant about the basics of a credit score and how it works. Some think that only when you apply for a loan a credit check is conducted. This is untrue; lenders aside, employers, insurers and utility companies also check your credit score. The misconceptions are many and sometimes they can be damaging instead of being plain harmless. All it takes is a little knowledge to clear these myths. Here are the most common myths that you should dispel:

Different credit scores – different methods

Equifax, TransUnion and Experian are the three main credit bureaus providing credit scores but each under a different name. Each of these bureaus employs the same formula to calculate your score. The reason each score is different is simply because they do not use the exact same data. One bureau may not have information from one particular creditor or the data used by one may date further back into your history. Whatever the reason, your credit score should not be drastically different from one another.

Loan shopping damages my credit score

Checking you credit score on your own will not drop the score. But it is true that when an inquiry is made by a lender or any such party, your score may drop a few points. But this is not the case if the inquiries made are done within a given period of time. Similar inquiries made within 45 days are considered as one inquiry. Within this short period, going to various lenders and having your score checked should not be a problem.

Factors affecting my credit score – income, age, sex, marriage

In reality none of these factors have a bearing on your credit score. A higher income or a raise in salary does not represent your conduct with previous credits and is not a factor that is considered in your score. Likewise, marrying does not merge the couple’s scores. Your scores are uniquely yours and any joint account opened will reflect individually on your credit scores.

Disputing credit scores can fix the problem

If there are errors on your report then disputing it is the logical way to go. But a random challenge to a bad report is not going to work. Although credit bureaus are required to check discrepancies within thirty days or remove the disputed information otherwise, odds are that they will not be fooled. There are no quick-fix solutions to a bad credit score irrespective of what anyone says.

Improving credit score by closing old accounts

Closing accounts will not have a positive bearing on your credit score but in fact it may actually hurt your credit score. This works on a simple logic. Credit score is affected by the difference between the credit available to you and the credit you use. By shutting accounts, you are simple reducing the amount of credit available to you. In effect, your credit balance will seem larger. So unless you are advised by a lender or a professional to shut an account as part of the credit repair process, do not do so. Also remember to stay clear of opening new accounts as this can negatively impact your credit score.

These are perhaps the most common misconceptions regarding credit scores that people live with. Always be careful of which information you choose to believe so that you do not fall into the trap of myths.


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