Credit Counseling

Little-Known Facts About Your Credit Score

It seems that every time you turn around, someone has a new “rule” to help improve your credit. Unfortunately, it’s hard to know for sure what’s true and what’s not. This is partially because the credit bureaus work hard to keep their exact criteria a secret, and also partially due to the fact that there are people out there who stand to benefit from your misuse of credit cards.

You’re in luck, however! We’ve compiled a list of little-known facts about your credit score that can help you make good, informed decisions.

You Don’t Just Have One Credit Score

There are three major credit bureaus that lenders use to make the decision to give you money or not. These are Experian, TransUnion, and Equifax. Most lenders will use the average of your three scores to determine your qualifications.

Your Income Doesn’t Affect Your Credit Score

Whether you make a million dollars a year or a thousand, your credit history is what matters, not your income.

Requesting Your Own Credit Report Doesn’t Affect Your Score

While your credit score is affected when companies make credit inquiries into your account, pulling your own report can never hurt you.

As Many As 80% of Credit Reports Contain Errors

If you’re serious about raising your credit score, one of your first steps should be to obtain a copy of your credit report and check it for errors. You may be surprised at what you find.

Your Credit May Keep You From Getting A Job

Potential employers check possible employees’ credit more than 60% of the time.

Late Payments Are Bad, But Can Be Counteracted By Recent On-Time Payments

Paying your bills late is never a good thing, but if your late payments were far in the past, your current and recent payment history will carry far more weight when determining your credit score.

Credit Bureaus Don’t Consider Payments “Late” Until They’re A Month Overdue

Unless your late payment passes the 30-day mark and gets reported to the credit bureaus, your credit won’t be affected negatively if you’re a few days behind on your bills.

Couples Applying For Loans Are Judged By The Lower of Their Scores

If you’ve got immaculate credit but your significant other has ruined theirs, any joint loans you try to apply for will be judged according to their terrible track record and not your perfect one. This means possible denial, and the very real consequence of higher interest rates.

Write Your Name Exactly the Same On All Your Credit Documents

If you apply for a loan as John Smith, another as John T. Smith, and a third as J.T. Smith, there’s a decent chance that you’ll wind up with multiple credit histories. Even worse than that, if there’s another J.T. Smith out there with terrible credit, you’re risking the danger of being lumped in with them instead of being rewarded for your good borrowing practices.

Accounts That Go To Collections Disappear After A Few Years

While having an account get sent to collections can have a negative impact initially, the damage will be mostly mitigated after two years. After four years, you won’t even be able to tell that it was ever there. After a total of seven years, the account is removed from your credit report altogether.

If You Have Bad Credit, You Can Still Get A Credit Card

There are things called secured cards that allow people with bad credit to work toward improving their credit score. To use one, you simply pay a deposit (usually equal to the card’s limit) and then use it like a regular card. If you’re responsible with your secured card, you can eventually trade it for a regular credit card. If you fall behind, the lender can use your deposit to cover their losses.

 

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