Top 5 Credit Misconceptions Debunked

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

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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1 Contribution
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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.

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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.

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?

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Reply by
tattoo666

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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.

3 Contributions
9 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

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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

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

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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/

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I have a 570 credit score through this site. Can I get a gas credit card? Also, will this credit score be the same on the top 3 credit bureaus?

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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.

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CK Moderator

Reply by
lettike123

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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!

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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

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Helpful to 1 out of 1 people

Pay it! On time, every month!

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0 People Helped

i filed for bankruptcy back in March and in June i received my discharge papers. Shortly after (weeks later) i checked my credit score and to my surprise my credit was 655. I decided to apply for a credit card and guess what, i got approved. i certainly wont spend out of control but happy that i was approved. don't understand much about the credit scale anymore.

Reply by
pattymae00

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0 People Helped

What card did you get & @ what rate. Thanks

Reply by
duster323

5 Contributions
9 People Helped

this same thing happened to me. i applied for a plaza tire card thinking i wouldnt get it.... i did! the limit was 800. i used it ONLY WHEN I HAD THE CASH TO BACK IT, then two months later applied for an orchard bank, got it also only limit is 300. same only used when have cash, about three months of using these cards at 25 to thirty dollars a month i applied for a capital one card, again i got it, no intrest till june 2011! if you pay in full every month the intrest wont hit your card! also as an update i just recently found out my plaza limit was raised to 1200, i didnt ask them to do it so that was nice, feels amazing to FINALLY be on right track. For you who dont know what plaza tire card is, firestone has same thing, there the same card, i HATE paying someone to work on my car but i only used it for oil changes and small stuff to improve credit

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

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0 People Helped

I noticed two hard inquiries in my credit report....without my knowledge.

Who has the right to do a credit check without permission?

How can I put a block on outsiders requesting a hard inquiriy without my knowledge or permission?

Apparently my score is affected by these unsolicited hard inquiries.

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