7 Credit Score Myths Debunked


Most people have a basic knowledge of how credit scores work. However, there are still quite a few myths circulating in and around the various media sources. Knowing how credit works is very important in order to gain a firm footing on your financial fitness and creditworthiness. Here are the most common myths:

Myth 1: Every inquiry on my credit costs me 2-5 points.

False. According to, a hard inquiry (a notation put on your credit report each time you apply for credit) may or may not lower your credit score by any points at all. Inquiries can have a greater impact if you only have a few accounts or a short credit history. In addition, large numbers of inquiries indicate greater risk: if you have many inquiries on your report, you are much more likely to declare bankruptcy (according to

Myth 2: Employers use credit scores.

False. Employers do not see your credit score, though they may request a copy of your credit report (and you have to specifically give them this permission). John Ulzheimer, credit expert at Credit Sesame, says he spends a lot of time debunking this myth. Credit reports and credit scores are not the same thing. When you request your credit report from annualcreditreport .com, you do not get your credit score, only your credit report. Getting your credit score is an added option available at a cost. Employers requesting your credit report do not have the automatic right to see your score. Banks and other lenders see your score when you apply for credit because they calculate it themselves, based on the credit scoring models they have purchased from FICO or one of the three credit bureaus. All three credit bureaus have publically stated that they do not provide credit scores for employment purposes.

Myth 3: 30 percent is a magic number regarding the amount of the credit limit that is being used.

False. According to FICO, the more you owe on your credit cards, the lower your credit score will be. Based on a study of data on 15 million members who visited their site in 2014, the highest credit score average was enjoyed by people who owed only 1-10% of their credit limits. This same study showed that owing 0% on a credit card is not as good as having some debt, even 1%.

According to Barry Paperno, who served as consumer affairs manager for FICO, there is no magic number in credit utilization that represents a fixed point where your credit takes a nosedive when you go above it or soars when you go below it. “With credit scoring it’s important to understand that mathematical calculations, based on data reflecting the experiences of millions of consumers and designed to predict future credit risk, don’t necessarily result in easy to remember numbers, like 30 or 50 percent, that can be assigned universally,” said Parperno on a blog post.

Myth 4: There are only 5 factors that feed into your credit score.

False. There are really dozens of factors in this complex model, more than can be neatly listed on a Power Point presentation or chart. has published a general guideline on how your credit score is calculated, and lists 5 general factors. However, if you pull your credit score, you will see on of 30+ reason codes listed at the bottom explaining why your score is not higher, and these reasons may not fit into the 5 categories. If you received your VantageScore with reason codes, VantageScore has a website dedicated to explaining these reason codes.

Myth 5: When you close an account, it’s bad for your credit score.

False. Much advice is given on the Internet not to close old accounts for the reason that it will lower the average age of your accounts because the account is removed from your credit report. Your credit score is influenced by the average age of your accounts, and FICO says this is 10% of your credit score. It’s not true that closing an account will remove it. If this were true, you could just close an account that had a negative history (missed payment, charged off), and *poof* it would be gone. An account generally stays on a credit report for 10 years if it was positive, 7 years if it is negative.

Therefore, closing an account does not affect your credit score; the account remains on your report and your average age is not affected until the account ages out and drops off.

Myth 6: You can have a zero as a credit score.

False. In both the VantageScore and FICO score, the range is from 300 to 850, so a zero is outside of that range. The lowest credit score you can have is 300. In the past, the Vantage Score ranged from 501 to 990, but with the era of Vantage Score 3.0, they have synced up with the FICO score, so they can compete more directly with it.

Myth 7: There is not a “fast fix” for a credit score.

False. Actually you can get rapid results (credit score improvement) if you pay down balances on credit cards. If you are doing a mortgage application, you can rescore quickly by doing Rapid Rescore (a proprietary application available only to mortgage professionals). However, if you have a lot of negatives and you are in the process of fixing your credit, you may be looking at several months before you see results. A credit repair company may be of interest to you as they can help speed the process. Talk to a professional today!

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