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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Why my score is 511 with you and is 545 with Equifax and  I havea lot of laccopunts they are not updated 

Thank you

Comment by
rairizarryra

5 Contributions
3 People Helped

Again huh???

All credit bureaus dont report the same accounts because credit lenders dont sometimes report to all 3 credit agencies..

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Reply by
Martinho69

29 Contributions
34 People Helped

Apples for a morgage loan and my Rico score was way higher than my equifax and trans union score. Had credit repair done and three collections did not come off, this will immediately stop any loan process until the disputed line is removed. I went back to them and the were able to remove the dispute status off the collections but my score dropped 47 points just because of the wording removed. Beware

Comment by
eb6250

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0 People Helped

The credit system is designed to try and force you to get a credit card or two even if not needed. They will keep your score low to help companies get more interest . Our system is not very good but trying to change it is futile. Hey, it's all we got . 

Comment by
laboe970

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0 People Helped

I'm 19 years old and I have a vehicle that is co-signed by my stepmom.

I've had three inquiries, 2 of which have been hard inquiries - the car dealership itself, and the bank I financed through.

When I first used creditkarma, I had a score of 697 and now it is 690 and nothing has changed.

I take my credit score very seriously. I pay all my payments ON TIME and I don't have any other type of loan out nor have I had any other inquiries.

Why did my credit score change?

I know it's only 7 "points" but that really bothers me!

Comment by
ktraci93

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IT'S ONLY 7 POINTS! It really is insignificant No lender would make a different decision based on a 7 point change. It's often recommended to long term investors not to watch the stock market every day. In a similar vein, I'd recommend that you'd feel better if you didn't check your credit score very often.

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Reply by
chief0

14 Contributions
2 People Helped

I got two credit cards to use only as tools to help my low credit score 638 Is it best to charge small things and pay off each month or charge a little larger amount and pay req pmt each month to show a good payment history ?

Comment by
rmwhitley2011

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Helpful to 1 out of 1 people

You can charge on them but It does no benefit to keep a balance. If the card max's out at $500.00 or $5,000.00 they take the percentage of usage. The problem is all credit card Co.'s don't reoprt the same time every month. If you pay your bill on the 1st the credit card Co. might report on the 29th. Keep it low If even used. There not only looking to see If you can handle credit but how much of it your using. To the credit report agency It's this simple. Credit card is worth $500.00 maxed He uses $250.00. So you already use 50% of credit aloud to you. Keep the percent low. Pay cash when you can but keep card open.

Reply by
doncoldwater

2 Contributions
1 Person Helped

Simply innacurate, as long as you keep your card open it will show an on time payment history.

No need to charge on it..

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Reply by
Martinho69

29 Contributions
34 People Helped

I've been working with an agency, Preferred Financial Services for two years since my credit card debt was extremely high due to several circumstances. I now have one account left to resolve. Bottom line PFS negotiated payoffs for each account between 35-55% of the balance. Although I paid the adjusted amount I am assuming my credit will never be fully repaired. I could have easily file Chapter 11, but chose to pay as much as I could and still keep a roof over my head. Any insight on this?

Comment by
burch13

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0 People Helped

Does a collection company that bought a very old debt, have the right to do a credit inqiry. It does not seem fair that a collection company from years ago can check my credit without permission. 

Comment by
angieshamblin

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0 People Helped

By law they can not.

You have a case.

I would file a complaint or call the FRCA.

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Reply by
Martinho69

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34 People Helped

how can i get charge off account to stop reporting my credit has beeing late its over two years and they still reporting it late. killing my score. HELP

Comment by
lambuck

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0 People Helped

Over time you wil see your credit grow pending that you make all your account payments on time now.

But bad accounts will remain on your file for 7 years.

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Reply by
Martinho69

29 Contributions
34 People Helped

Why is credit karma score so much lower then any other score I look at with all my other credit reports. I never have figured that out.

Comment by
doncoldwater

2 Contributions
1 Person Helped

what is bad to good in credit numbers?

Comment by
mustang1113

4 Contributions
0 People Helped

Having debt over 35% of your credit limits is bad.

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Reply by
Martinho69

29 Contributions
34 People Helped
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