Six Myths About Credit Scores

In the world today, there is a lot of confusion about what affects a person’s credit report and FICO scores. Take a look at the six myths below and how they really impact your scores.

MYTH 1: Your credit score drops if you check your own credit
If you view your own credit report, this qualifies only as a “soft inquiry” and doesn't affect your score. Only lenders or creditors can lower your score with “hard inquires.”

MYTH 2: You should close old or inactive accounts to help your credit score
Closing an account may lower your credit score because it can shorten the duration of your credit history.

MYTH 3: Paying off a negative record means it’s taken off your credit report
Bad records such as collections or late payments will remain on your credit report for up to seven years.

MYTH 4: Cosigning doesn’t mean you’re responsible for the account
If you cosign a loan or have a joint account, you are legally responsible for the account and it will show on your credit report as well.

MYTH 5: Making on-time rental, utility, and cell phone payments helps my credit score
On-time payments of this category are not reported to the credit companies but negative or outstanding debt is.

MYTH 6: Your credit score reflects changes or trends in your payment behavior
Historically, credit scores have not reported trends in payment behavior, meaning they are just a snapshot of your payment history at that moment in time.

*Courtesy of California Association of Realtors

 

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.