Truths and Myths about your Credit Score
There are several very important truths about
your credit score:
Truth #1: Your credit score is
the single most important factor determining
whether you’ll get approved for a mortgage, car
loan, refinance loan, or credit cards.
Truth #2: Your credit score
affects your APR. If it’s low, you’ll pay
very high interest rates, up to 23%.
Truth #3: Your credit score
may affect how much you pay for car insurance,
since insurance companies usually run a credit
check before selling you insurance.
Truth #4: Your credit score
may even affect whether or not you are hired for a
job, especially if it’s a managerial or financial
position.
Truth #5: You have three
credit scores, one from each of the three major
credit bureaus, and the scores may vary by as much
as 50 points or more.
There are also many widely distributed
untruths, or myths, about credit scores:
Myth #1: Checking your own
credit will lower your score.
The truth is you can check your credit through
the bureaus or a legitimate score seller like
MyFICO.com, as often as you wish without impact.
Myth #2: Your age, employment,
race, gender, and income are factored into your
score.
Personal information, net worth, and income do
not affect your credit score. However, eliminating
debt will improve it.
Myth #3: Credit Repair
companies can remove all negative information.
You can dispute inaccurate information and
credit agencies are obligated to investigate
credit inaccuracies within 30 days or remove
disputed information. However, no one can remove
negative (but accurate) information from your
credit report.
Myth #4: Too many credit card
offers and shopping for loans will hurt your
score.
It’s true that too many inquiries will lower
your score. However, you can shop for a mortgage,
home equity loan, or car loan as long as these
inquiries are made within 14 days of each other,
so they count as one inquiry.
However, this grace period does not apply to
credit cards. Credit card offers do not affect
your score as long as you don’t respond to them
and use all the credit available to you. However,
if the ratio of used-to-available credit is high,
it reflects a higher risk. Always keep balances
below the available credit line.
Myth #5: Marry your spouse and
you marry his (or her) credit.
You do not inherit your spouse’s good or bad
credit. However, unlike many marriages, your own
credit, good or bad, lasts forever.
And when you open joint accounts, the
information is reflected jointly, on each of your
credit reports.
Conclusion:
Take care of your credit
score. Your financial health depends on it.
