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Credit Myths You Should Know!

Writer's picture: 90 Day Credit Experts90 Day Credit Experts

Credit Myths You Should Know

1. Approaching your credit limit will not negatively impact your credit scores. FALSE. Even if you pay off your credit cards every month, if your credit utilization ratio is high, it may impact your credit scores. Your credit utilization ratio represents how much revolving credit you're using compared to the total amount available to you. Revolving accounts, such as credit cards or personal lines of credit, do not have a fixed number of payments. Installment loans, such as vehicle loans, do. When you pay your vehicle loan in full, the account would be closed and marked as paid. Keep in mind there are many different credit scoring models with different ways of calculating credit scores.

2. If I pay off a debt, any late or missed payments on that account will be removed. FALSE. That's not the case Late payments can remain on your Equifax credit report for up to seven years from the date you missed the payment. And late or missed payments remain even after the debt is paid.

Credit reports, credit scores and credit bureaus can all seem complicated, but they don’t have to be. Educating yourself on what they all mean – and actions you can take – is a great first step.

3. You have a universal or overall credit score. FALSE. There are many different credit scores, and each may be calculated differently. In addition, your lenders and creditors may report data to all three nationwide credit bureaus -- Equifax®, Experian®, and TransUnion® -- just one or two, or none at all. That’s why your credit scores may be different among the three credit bureaus.

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