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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Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

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12 People Helped

Helpful to 12 out of 13 people

If you want an excellent credit score, there's just a few simple steps to follow.

1) Borrow ****loads of money.

2) Pay debtors on time.

3) Go to step 1.

1 Contribution
9 People Helped

Helpful to 9 out of 9 people

Lets say I applied for a credit card. Is it possible for the lender to tell me what reporting agency they check before they actually do a hard inquiry?? My equifax score is 784 and my Transunion is 755 both through FICO. My CK score is a 750 I'm still hesistant because I hear of people with stellar credit getting declined all of the time. I don't want to risk my score for an approval that's not guaranteed. I think its good to know who they're checkin before they check. Holla

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11 People Helped
Helpful to 11 out of 13 people

Check or the "credit pulls" database in the forums section of  Both of those allow you to search databases that show which creditors pulled which credit bureaus when people applied for accounts with them.  I like the credit boards site better since it allows more search options.

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