10 Lies About Your Credit Report

by Ron Haynes


There’s a lot of misinformation, myths, and outright lies about credit reports, what goes in them, what affects them, and how they’re used to compute your credit score.

Lie #1: Credit repair firms are worth the money.

Errors can be easily cleaned up, but the truth cannot easily be removed from your report, despite what the credit repair companies claim. The truth is, after you go to www.annualcreditreport.com and pull your report, YOU can challenge any incorrect information yourself. You don’t need to pay someone to write a hundred letters. Yes, that’s how they work. The “credit repair” companies will flood the credit reporting agencies, which in turn ask the creditor to verify or document the report. If the creditor cannot, the listing must be removed. But if the creditor later does verify or document the entry, the reporting agency puts it back into your file.

Lie #2: Getting caught up on my debts will instantly clean my credit report.

It’s going to take some time and you need to face that music. Your report reads like a history book, not a snapshot. Remember that you cannot change the past. Also, there is always a lull between the action, the reporting to the credit company, and the appearance of the information on your report.

Lie #3: I don’t need to check my credit report if I pay my bills on time.

Experts estimate that up to 80 percent of all credit reports contain errors and chances are very good that you’re not in the other 20 percent. Check your report regularly to insure yours is correct.

Lie #4: Too many inquiries hurt my score.

In the past, this was true but today’s credit reporting companies are savvy enough to recognize a consumer’s pursuit of the best rate. As a result, most inquiries of a similar nature (from mortgage companies, for example), are treated as a single inquiry.

Lie #5: Checking my own credit report hurts my score.

Checking your own report is considered a “soft pull” and isn’t calculated in your score. Only “hard pulls” from firms that will either loan you money or offer you a job actually count.

Lie #6: Canceling my credit card will boost my score.

Canceling a credit card may or may not hurt you, but most creditors want to see two to three open accounts prove you can manage debt responsibly. On the other hand, extremes never look good. Opening one charge account here and there to take advantage of a 10 percent offer is negligible. Going wild and signing up for eight during the holidays would probably decrease your credit score.

Lie #7: FICO scores are locked for six months.

Scores are dynamic, meaning they’re constantly changing as information comes available. Each time new information becomes available from Equifax or other credit companies, FICO recalculates your score.

Lie #8: All credit reports are the same.

These days, most creditors across the country do report their information to all three major agencies: Equifax, Experian and TransUnion, but the speed in which they update records isn’t necessarily equal. Also, the reporting agencies use inquiry activity to update your address, phone numbers, employment status. Because creditors typically pull only one company’s report, it’s possible that, say, Experian doesn’t show your current employer.

Lie #9: A divorce decree automatically dissolves joint accounts.

Don’t count on it. The judge may have approved your plans to divide credit card, car, and house payments, but that carries absolutely no legal weight with the creditors themselves. The creditor may be located in another state and is under no obligation to follow the judge’s orders. Divorcing people must contact each creditor and either:

  1. Close current accounts or
  2. Have the person being removed sign a letter of consent for this action.

And assuming certain debts isn’t a unilateral decision on your part. Creditors typically do a credit check on your ex and if they don’t deem him or her financially stable enough to assume that $25,000 car loan, for example, they won’t agree to remove you from the note.

Lie #10: Bad news automatically comes off in seven years.

Again, don’t count on it. Most bad information will probably come off in that time, but not always. Chapter 13 bankruptcy (reorganization of debt) disappears seven years from the filing date. But if you filed Chapter 7 bankruptcy (exoneration of all debt), the window is 10 years from the filing date. Also, if you pay off or close an account that had no delinquencies or problems, it, too, remains on the record for 10 years rather than the previous seven.

A lot of the things that people “know” about credit reports and credit scores simply isn’t true, but by recognizing these 10 lies, you can easily insure that you don’t fall for these myths.

About the author

Ron Haynes has written 1001 articles on The Wisdom Journal.


The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.


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{ 3 comments }

mewithoutdebt

I have heard from multiple people that bad news (account) etc automatically comes off in 7 years but as you say its 10.Do you know why so many people believe this erroneously?

Ron

Probably because Chapter 13 DOES get removed seven years from the filing date. I have one account on my credit report that I never used, but has been on there for over 25 years. Never used it even once.

fotini

i have a credit card ..is on my credit as adverse, it was open in 1999, trans union removed it..equafax is telling me that iberia bank (credit card )…it cant come off until dec 2011…bcz the last deliqunt date is 2004, & experian is telling me that iberia bank told em that deliquent date was 2007 so is not gonna come out of my experian until 2014….wat should i do ,how can they make up ther own dates, have different dates on credit bureus…

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