Top 5 Credit Misconceptions Debunked

We generally make money when you get a product (like a credit card or loan) through our platform, but we don’t let that cloud our editorial opinions. Learn more about how we keep this compensation from affecting our editorial views.

Top 5 Credit Misconceptions Debunked

We've 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 with the truth about credit.

Myth #1: You only have one credit score.

The reality is that you can have a wide variety of different scores, not just one... or three. Why? This confusing fact can be attributed to a few different factors.

First off, there are three main national credit bureaus, and they can all have differing information about you. Most lenders aren't required to report to all three bureaus, so one bureau may have information about one of your loans while the other two don't. Differing information can understandably result in different scores.

Secondly, there are dozens of scoring models that could be used to calculate your score. If one model emphasizes your on-time payment history while a different scoring model puts more weight on your credit utilization rate, you could end up with different scores even if they come from the same bureau and are based on the same information.

Lastly, credit scores can change constantly. Lenders are regularly sending new information to the bureaus, so your credit report (and subsequently your scores) could change on a day-to-day basis.

Myth #2: Your score will drop if you check your own credit.

You don't need to be afraid of checking your credit score or report. While hard inquiries, which can be made when you apply for credit, could bring your score down, checking your own score usually results in a soft inquiry, which doesn't harm your credit. Feel free to look at your scores and reports with Credit Karma as often as you'd like -- you won't be penalized or charged a penny.

Myth #3: Closing old accounts is always a good idea.

If you're considering closing an old account, thinking it'll help your credit score, think twice. Canceling old credit accounts could lower your score because you lose the credit limit associated with that account, which can cause your credit utilization rate to increase if you don't cut back your spending. In addition, if it's one of your oldest accounts, it could lower your average age of accounts and damage your score when it falls off of your report.

Myth #4: Being a co-signer doesn't make you responsible for the account.

When you open a joint account or co-sign a loan, you are taking on legal responsibility for the account. Any activity on these shared accounts, good or bad, could show up on both people's credit reports. This means that if you co-sign for a friend's auto loan and he doesn't make the payments, your credit profile could be hurt by his actions and vice versa.

Myth #5: Your credit reports are always accurate.

In 2013, the Federal Trade Commission found that one in four consumers identified errors on their credit reports that might affect their credit scores. If you want your credit reports and scores to more accurately represent your credit history, you can regularly pull your reports and dispute any inaccuracies you see.

Sponsored by: TrueCredit

Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Email us at corrections@creditkarma.com. For questions about your Credit Karma account, please submit a help request to our support team.

Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

All Comments

Results 61-70 of 280Results per page: 5 | 10 | 25Page 7 of 28   Previous | Next
1 Contribution
0 People Helped

Multiple hard inquiries by the same lender or other lenders in the same category within a limited timeframe (30 days) only counts as one inquiry according to Fair Isaac Co.

Reply by
sheila75

9 Contributions
1 Person Helped

Thats not always true. When I bought my car Shottenkirk tried to get me the lowest interest rate. I couple years later I did it again for a different car, when i went to the bank they denied me because of my inquiries. They showed me my report and it said that a factor of my low score was too many credit inquiries. Shottenkirk told me since they were all done the same day then it would be 1 hit and it was more like 10 hits. My score went from 580 a few years ago to 679 now. I listen to my banker now not the salesman.

1 Contribution
0 People Helped

There is hard credit inquiries on my credit report that are over 3 years old, why is that? i thought they were supposed to disappear after 2 years.

Top Contributor

Reply by
tattoo666

13 Contributions
1 Person Helped

challenge it with the credit bureau that is reporting it for being more then 2 years old and they should remove it.

1 Contribution
0 People Helped

I have not been working for about 12 months...Would that lower my credit score?

Reply by
sCex0wtN

2 Contributions
0 People Helped

My opinion would be that it wouldn't lower your credit score but it would affect your debt to income ratio. That might affect a lender's decision to give you a loan. If you are able to pay your bills/credit cards on time, and you don't need additional credit I don't think your credit score would be lowered.

3 Contributions
10 People Helped

I filed for Chapter 13 over a year ago. My credit score is 598. How can I improve my score. I am paying back 80% of the plan and I have never been late. I have a car payment that I pay monthly through the court.

Reply by
rkrumrey

1 Contribution
0 People Helped

I went through exactly what you did many years back. What helped me was a secured credit card..maybe a couple hundred dollars. Use it to buy groceries, gas..things like that and pay it off every month. Unfortunately, you have a long road ahead of you but you will recover. It all starts with one account and build on it. You'll get there..

1 Contribution
0 People Helped

My question is where is the proof that this is true? I got a report from True Credit and it is like 90 points difference than here, with both being from Trans union someone is not getting all the right info here.

TrueCredit moved to the Vantage score at the beginning of 2010. The range for the Vantage Score is 501-990. Given the difference in ranges, their scores are going to be higher on average.

Review by
CK Moderator

Reply by
lettike123

1 Contribution
0 People Helped

Same here...when i saw my score here i panicked and paid $14.99 to annualcreditreport.com (i just checked it a few months ago, so i had to pay this time) for a report to check it w/ all three beureaus and there was a 70-100 points difference. Phew, that was a big scare, i don't know why the big difference, the number here is pretty surprising/depressing.

Good luck!

1 Contribution
0 People Helped

i love this site its the only site dats says you can review your credit score for FREEEE....

my credit score is very low i would like to bring my score up what should i do

next i have a credit card balance which i never had a credit card what should i do

Reply by
keef257

1 Contribution
1 Person Helped
Helpful to 1 out of 1 people

Pay it! On time, every month!

2 Contributions
164 People Helped

Love this site so far. I just ran my credit score (it's 609)and have also pulled all 3 credit reports. I am at the tail end of paying off my credit card debt in which most cards went into collections. I have one more to settle but have two judgements that have been paid off within the last 5 months yet they are still showing as unresolved on my credit reports. How can I change this and what effect will it have on my credit score once they are shown as being settled?

Top Contributor

Reply by
tattoo666

13 Contributions
1 Person Helped
Helpful to 1 out of 1 people

You have to contact who ever the judgement was for ( or their attorney ) You can get a form from them that is signed and dated. Then "YOU" have to take it to the court house where the judgement against you was filed with that signed and dated paper saying that the judgement has be satisfied. You may have to pay a small fee when you do this but you should be able to get a copy showing the judgement was satisfied. It may stay on your credit but it should change from owing to being settled.

Reply by
sheila75

9 Contributions
1 Person Helped

call the credit company and make sure thier records are updated.It could take 4-6 weeks before you notice something. Also you should dispute it on ur credit report. Then the credit reporting company will verify your balance with the company.Setteling ur debt is more of a punishment than a reward like it should be. After my divorce my ex-husband got our truck the bank forclosed. I thought it would help me to settle with the bank. It stayed on my credit for 10 years, hurting me drastically on getting lower interest credit cards. I'v even been turned down for credit because of the duragatory account. If I would have filed bankruptcy then it would have fell off in 7 years. I was punished an extra 3 years for being with a ****head. Pardon my language!!

Reply by
sheila75

9 Contributions
1 Person Helped

use the credit karma tools and calculator to figure it out. It will predict your future score.

1 Contribution
0 People Helped

Hi. I am new to this site. How do u pull all 3 credit reports on here? It says my credit score is 670 I find that hard to believe when lenders recently told me that I had no numbers.

Reply by
schoolmom07

1 Contribution
0 People Helped

We have been told the same thing about not having a score but here is says we have a 578..How is this/

2 Contributions
0 People Helped

 Well, I have gone way down hill thru no fault of my own - I developed bipolar disorder in 2006 and before I even knew that was what the problem was I had charged over 100,000 in stuff I did not need at all - was still able to work and managed to pay down about 20,000 but in je of 2010, dr said no more work needed to apply for ssda - well even though they claim you can work up to 980.00 a month, you can't - I have already been denied twice and it will be one more yr waiting for the alj hearing - ironically I worked as  a high risk collector.......so you can't work and you cannot get insurance because you have pre existing conditons - don't know how social security defines words, but apparently they do not use a dictionay because I have only worked in high pressure call centers - drs flat out said no more work w the public and that if I ever worked again would have to be completly stress free..........yeah, right - I have 6 diagnoses that fall under elibigibility for ss but they claim I can return to my job as an "order taker".   So I went from perfect cr to a score of 628 -- I blame the banks as well - the most money I ever earned in a one yr time frame was 41,000 and that was with a ton of overtime - so why is it that they gave me over 125,000.00 in cr lines - I had more than my husband and he makes 4 times as much as I ever did.  If you want to know why this country is in such a mess - is while you are strugggling using the last of your savings to make it thru 2 yrs of dr appts and prescriptions, you get no help and you cannot work -- once you are declared disabled, then you can go back to work...........and to top it off, they even allow you to try out a job for 9 months no matter how high the salary and you will still get your ss payment - after 7 mnths if you decide you do not like it, your ss benefits are not interrupted at all.............I would guess that prob over half the US has cr scores like mine..........

2 Contributions
0 People Helped

DO AWAY WITH THE CREDIT SYSTEM!!  IF YOU WORK AND PAY YOUR BILLS YOU SHOULD BE ABLE TO BUY WHATEVER YOU NEED OR WANT!! 

Results 61-70 of 280Results per page: 5 | 10 | 25Page 7 of 28   Previous | Next

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW

Comment on this Article

Write your comment:
Enter Your Comments