Your credit score is one of the most important personal finance measuring sticks. Lenders place considerable emphasis on a credit score when evaluating applicants for loans and credit card accounts. Unfortunately, 10 credit score myths that won’t go away add confusion to the credit score rating process.

Let’s dispel the myths to give you a better understanding of what a credit score means for your personal finances.

#1 You’re Stuck with a Bad Credit Score

If you get one piece of advice concerning your credit score, it is a bad score lasts only as long as you continue to make bad personal finance decisions. Maxing out credit cards, making late payments, and allowing delinquent accounts to reach the collections stage is a recipe for a long-lasting poor credit score.

#2 Asking for a Credit Report Damages Your Credit Score

This myth has caused plenty of heartache for consumers that refuse to check the status of their credit history for fear of the action taking a hit on their credit scores. You can check your credit score as often as you like, as long as you check it by using a credit scoring service such as Equifax, Experian, or TransUnion.

#3 Credit Scores Take a Long Time to Turn Bad

It takes just six months for a lender to charge off a delinquent credit account. The charge off immediately appears on a credit report. Multiple charge offs at the same time can destroy your credit score in just six months as well.

#4 Lenders See the Same Credit Score That You See

The credit score you access from one of the credit scoring services is called an educational credit score. It is not the same credit score a lender sees when it decides whether to lend your money or offer you credit. 

#5 Marriage Combines Credit Scores

If you and your spouse hold individual credit accounts, tying the knot does not merge both credit scores. However, joint accounts affect both individual credit scores. None of the primary credit scoring services merge the individual accounts of married couples.

#6 Employers Access Credit Scores

Employers cannot check credit scores of either current employees or job applicants, but they can access credit reports that detail the credit histories of current employees and job applicants.

#7 Closing a Credit Card Improves a Credit Score

Lenders consider several factors when calculating consumer credit scores. The debt utilization rate is one of the most important factors. It represents the amount of available credit a consumer has divided by the total amount of credit given by a lender. Closing a credit card that has available credit hurts the credit utilization rate.

#8 Paying Off a Delinquent Debt Helps Your Credit Score

Paying off a debt in collection does not do anything for your credit score right away, but the long-term implications can be positive if you eliminate poor debt management practices.

#9 Bad Credit Score Equals No Credit Approvals

Although lenders make credit scores the most important factor in determining whether to lend money or issue credit, other factors like income and overall debt obligations can lead to approval for credit.

#10 You Need to Be Rich to Have a Good Credit Score

The money in your bank accounts only indirectly influences your credit score. It is how you spend the money in your bank accounts that directly determine your creditworthiness. If you make a lot of money, but you do not pay your credit card bills on time, expect to see a low credit score.

Federal law allows consumers to request a free credit report every year from each of the three main credit reporting bureaus. Take advantage of the federal law to stay on top of your credit score.

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