7 Persistent Credit Report Myths

There are myriad myths and misconceptions about a gamut of different topics, but few are as persistent as these 7 credit report myths that live on to this day. Worse still is that the whole subject is technical, which makes these persistent myths about it all the more impressive and annoying at the same time – they just will not go away.

Perhaps what keeps them alive is that most of them are preconceived misconceptions. They are mistaken assumptions that can easily be made by anyone, regardless of how long they have been around. Do you still believe in some of these credit score myths and misconceptions?

Myth#1 – Checking Your Credit Report & Score Can Lower Your Score

To become financially savvy and in control, you need accurate data from reliable sources. Checking your credit report and score is a recommended way to do just that; personal inquiries into your credit standing – these are called “soft inquiries” – do not reflect on the credit report and do not impact your credit score. In fact it is highly recommended that you keep a close watch on your score if it goes south, so you can monitor the progress of your finances and assert control based on what you observe. You can obtain a free credit report from the gov once an year and this will not damage your score in any way. It is your right to examine them.

Myth#2 – There are Quick Fixes that You Can Use for Bad Credit

Just as a bad or ailing credit score is the result of a long period of shabby financial handling for one reason or other, you cannot use a ‘quick fix’ to just miraculously get rid of it. Money matters are serious issues and no sleight of hand can relinquish your low credit score just like that. You have to work on your finances for a long time to get your credit score back up to par, and even then you might not be able to borrow the way you would if your record was spotless to begin with.

Myth#3 – Credit Repair Companies Can Fix Your Credit Score for You

This is a variant of the “quick fix” myth and is more of a misconception.  Credit repair companies do exist, and the reputable ones do a good job of helping you fix your credit score. That is what this misconception misses: the companies help YOU fix your credit score. They do NOT do it for you. They are advisors and counselors and financial abettors, no more, no less. For some people, they can easily learn how to fix their bad credit and do it on their own. For others, there are credit repair companies.

Myth#4 – You Have Only One Credit Score

There are three main credit monitoring and reporting bureaus that keep track of your credit score: Equifax, Transunion, and Experian (plus Innovis in the US).  If you only had one credit score, there would be no need for three bureaus. These three organizations have similar methods of calculating your credit score, but have differences that set one apart from another. One bank or creditor might get reports from one of these three while another bank or creditor gets reports from another, though usually they check records of all three to get a better picture of your financial status.

Myth#5 – You Do Not Have to Worry About Credit Scores If You Do Not Use Credit

You can live without credit, but can you live without renting your apartment, applying for insurance, or getting a job? Your credit score is a reflection of your financial capabilities and responsibility in handling an important aspect of your life. Anyone (landlord, insurance company, potential employer) who needs to understand how you handle your finances for “permissible purposes” can get a copy of your credit report (at times with your permission) and base transaction decisions on that.

Myth#6 – Your Good Credit Offsets Bad Credit

Bad credit history will not look good just because you are currently successfully handling your finances well. Banks and financial organizations that check your credit report do so to see how much of a risk you bring to a business transaction. If there is still existing bad credit history on your report, your good history will not offset it, though your current good standing will make a significant impact on the overall decision. It might not seem fair, but there are many reasons you might have gotten bad credit before such as economic situations beyond your control. These factors must also be considered as possible risks.

Myth#7 – Some Items Last Forever in Your Credit Report

Foreclosures and bankruptcies have a huge impact on your credit score, but they will not reflect on credit reports forever.  Such items can last in reports for as long as 7 to 10 years – which is a very long time for bad credit to affect your finances – but they will be shed off after that allotted time to reflect new financial transactions of import. Since your good credit does not offset bad credit, clearing up this misconception should be good news for you: that lien or bankruptcy from years away will eventually wash off, and you can work towards making your report a clean slate until then.

Obviously, it is quite simple to make the erroneous assumption that if you do not use credit your credit score will not matter that much or that you have only one credit score. It is even just a figment of fairness to assume that good credit offsets bad credit. What is important is going through the effort of clearing up what is credit report myth and correcting misconceptions. After all, you can get problems with your credit if you continue to believe in these credit score myths.