Myth: My credit report reveals my income and what I spend my money on.
Truth: Your income and bank statements are NOT included on your credit report. The bulk of your credit report consists of information about your credit accounts – date opened, credit limit or amount of the loan, payment terms, the balance and your payment history. Also, your credit report contains a list of “inquiries” or requests to see your credit report and any bankruptcies, liens or judgments and debts reported by collection agencies.
Myth: When you get married your credit report is merged with your spouse’s to create a combined credit report.
Truth: I actually covered merged credit and marriage a few days ago. Since credit reporting agencies only maintain credit files on individuals, your credit file remains as your individual credit file when you get married … it isn’t merged with your spouse’s credit file. The only information that would appear on both you and your spouse’s reports would be joint accounts or those for which one spouse is an authorized user, or other items in both of your names, such civil judgments, liens and bankruptcies.
Myth: How I pay my bills is the only factor in my credit score.
Truth: Your payment history to existing creditors IS the single biggest factor determining your credit score … but it isn’t the only one. In most credit score models, payment history comprises 35% of your score. Other determining factors are: amounts owed (30%), length of credit history (15%), types of credit used (10%) and new credit inquiries or requests for your credit file (10%). So, it is a good idea to always at least make the minimum payment on time each month – and pay more when you can to decrease the amounts you owe.
Myth: Credit repair companies can clean up my credit report instantly.
Truth: Credit repair organizations cannot “clean up” your credit by removing missed payments, bankruptcies, liens and judgments from your credit history. There are typically no quick fixes because accurate and timely credit information generally can not be removed from your credit report. If you need help, consider contacting a reputable credit repair company or counseling agency to make a plan for paying off credit bills. And, beware of agencies that offer “quick fix” ways to get out of debt as they are often unethical and sometimes illegal.
Myth: No one can dispute what’s on their credit report.
Truth: You have the right to dispute information that you feel is being reported incorrectly on your Equifax credit file. The quickest and easiest way to initiate a dispute is online at Equifax.com – but you may also do so over the phone or through the US Mail. You should have a current copy of your Equifax Credit Report™ and your ten-digit confirmation number in order to complete this process.
Myth: Transunion, Equifax, and Experian determine if I get a loan.
Truth: The three credit bureaus DO NOT determine whether you qualify for a loan and at what rate. When you apply for a new loan or credit card, a lender may use the information in your credit reports to determine whether to lend you money and at what rate – based on their own risk criteria. The credit system allows consumers to acquire needed credit quickly and easily while allowing lenders to offer terms that correspond with the credit risk they’re willing to accept.
Myth: Closing a credit card account will improve my credit score.
Truth: Closing credit card accounts will not always have a positive impact on your credit score. As a matter of fact, closing credit card accounts may not always be a good idea for two reasons: (1) It can hurt your credit to debt ratio (2) It could also hurt of the length of your credit history if you close an older account. Also, don’t open new credit cards that you don’t need just to increase your available credit. This approach could backfire and actually have a negative impact on your credit score.
Myth: Consumers only have one credit score.
Truth: There are many different score models that can be used to calculate your credit score. But the triple credit score found at GoFreeCredit.com is used most often by lenders when determining whether or not to lend you money and at what rate. Further, lenders also may use a specialized scoring model to meet their specific needs. For example, an auto dealer might use an “auto adjusted” score model to add more weight to your auto loan payment history.