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Five Myths About Your Credit Score

On Behalf of | Jan 17, 2014 | Consumer Protection

Your credit
is the triple digit number that represents your credit
worthiness or in simple the terms the number that determines how
likely it is that you will pay back the money you borrow.
Lenders, such as banks and credit card companies use your credit
score to determine whether or not to lend you money, how much money
to lend you and at what interest rate.  The better your credit
score, the more money you can borrow and the lower the interest
rate.  Myths about your credit score have blossomed over the
years.  Below is a list of myths and the truth behind these
erroneous beliefs.

Myth Number 1:  The higher your salary, the higher
your score

The truth is your income has nothing to do with your credit
score or credit
.  Your credit score and report are solely based on
your ability to pay your bills in a timely fashion and nothing
more.  Your personal wealth, or lack thereof, is

Myth No. 2:  During the application process your
credit score can cost you the job

While most
employers do a credit check today, they are only entitled to
receive a copy of your credit report with your express written
consent.  Employers, potential or existing are not entitled to
see a copy of your score.

Myth 3:  Closing your credit card accounts will
improve your score

While closing an account may make sense for you financially, it
will not always have a positive
effect on your credit score
.  In fact, closing an active
credit card account may actually lower your score depending on how
high a balance you carry compared to your credit limit.  If
you close a credit card account, it may affect your “credit
utilization” (the amount of your balance compared to your amount of
available credit), a factor used to help determine your credit

Myth 4:  Looking at your credit report will lower
your score

There are two different types of inquiries-soft and hard.
A soft inquiry does not affect your score and a hard does.
Soft inquiries include pulls done for promotional purposes and your
own personal inquiries.  You may pull your own report as often
as you like and it will never affect your score.  Hard
inquiries are those performed by creditors and will affect your
score.  Hard inquiries include pulls made when you apply for
credit, when an existing creditor looks at your report or when a
collector looks at your report.

Myth No. 5:  There is only one credit

Fact is, there are many different
credit scores
and your score may vary depending on which
company is used and which credit reporting agency’s information is

If you need additional information regarding your credit report
and credit score and wish to speak with a licensed attorney, contact SmithMarco P.C. for a free case