Top 5 Credit Misconceptions
Top 5 Credit Misconceptions

We have all heard the rumors...from neighbors, relatives, or friends. A wide variety of myths float around about what you should and shouldn't do to manage your credit. Credit Karma has exposed these urban legends to provide you and your informers with the truth about credit:

Your score will drop if you check your credit - Fortunately, this one is definitely not true. Checking your own report and score is counted as a "soft inquiry" and doesn't harm your credit at all. Only "hard inquiries" from a lender or creditor, made when you apply for credit, can bring your credit score down a few points. Worried about damaging your credit while shopping around for a loan? Multiple inquiries for the same purpose within a short amount of time (a few weeks) are grouped together into a less damaging period of inquiry.

Closing old accounts is a good idea - To close or not to close, that is the question. Many people advocate closing old and inactive accounts as a means of managing their credit. But they should think twice before closing the oldest account on their credit reports. Canceling old credit accounts can lower a credit score by making the credit history appear shorter. If you want to reduce your levels of available credit, ask for your credit limits to be lowered or close newer accounts instead.

Once you pay off a negative record, it is removed from your credit report - Negative records, such as accounts in collections, bankruptcies, and late payments will remain on your credit reports for 7-10 years. Paying off the account before the end of the set term doesn't remove it from your credit report, but will cause the account to be marked as "paid." It is still a good idea to pay your debts, just be aware that the major change in your report won't come until the negative records expire.

Being a co-signer doesn't make you responsible for the account - When you open a joint account or co-sign on a loan, you are taking on legal responsibility for the account. Any activity on these shared accounts, good or bad, will show up on both people's credit reports. If you co-sign for a friend's auto loan and they don't make the payments, your credit profile will be hurt by their actions and vice versa. The only way to stop this double reporting is to refinance the loan or to have the creditor officially remove you from the account.

Paying off a debt will add 50 points to your credit score - Your credit score is calculated using a complex algorithm that takes into account hundreds of factors and values. It is very hard to predict how many points you can gain by changing one factor. For a person with a high credit score, just one late payment can cause a significant drop. If a person has a low credit score, it may not cause a large drop at all. Just keep paying your bills on time, reducing your debts, and removing negative inaccuracies from your credit report. Good financial behavior and time are the two most important factors for your credit score.

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glad to see others reviews

Comment by
george2oliver

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thank you

Comment by
george2oliver

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If something has been charged off, is it better to let it come off after 7-10 years.  I have heard that if you pay it, the clock starts over again to come off your credit.

Comment by
rodriguezkids5

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It seems bank America closed my account I am paying Bank of America every monthlease help with why?

Comment by
Lovie1934

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HUH?????

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Reply by
Martinho69

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What bothers me is that the credit score we are given is not at all the score provided to the lender.

Comment by
Kredic

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What has caused my credit score todro from 771 in 2012 to 765 in 2013. I have no debt, pay my bills immediately and carry no balances on anything. WHAT IS GOING ON??

Comment by
shirllhk35

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Sometimes being a co-signer can be a gift to a responsible child.  When my daughter was in college, I had her on the car notes for successive car purchases.  I was responsible for the payments as was our agreement.  When she graduated from college she had a 723 credit score at the ripe young age of 22.  My own score was at 670 having rallied from a pre-bankruptcy score of 385.  The ex was not as kind to me as I was to my daughter. 

I am proud to say she only improved her score and qualified for a loan on a newly built home. 

Credit scores is a number game.  When you learn the rules of the game, it is winnable!

Comment by
MagW1957

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How long do inquiries stay on your report?

Comment by
Larry2216

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2 years

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Reply by
Martinho69

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i just think it's funny that you have to be in a lot of debt in order to get more money to be..... more in debt.... creditors are like sorry , you dont owe enough money to other people so we cant give you a loan, something seems backwards here, granted i have a great credit score and am young and building, building, building my finances and credit... but for people that arent stable and do really need a loan, it seems backwards

Comment by
mattyi02

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I have no problem with Wells Fargo

Comment by
rairizarryra

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