The Facts Behind The Most Common Credit Score Myths

credit score myths

Your credit score is very important as it plays a big factor in the approval of your future loans. Most lenders check on credit records before deciding if they would lend a specific amount to the borrower. If you have a good credit rating, there’s a bigger chance that your loan will be approved.

There are three major credit bureaus where you and lenders can check your credit report. They are TransUnion, Experian and Equifax. You are entitled to have one free credit report from each of these agencies every year. While you may have a basic understanding on credit score, there might be some myths about it that you thought were true. Let’s find out what they are and get to know the facts.

Pay Your Bills on Time and Your Bad Scores Will Be Removed

The best way to increase and maintain your credit score is to pay your credit bills on time. If you’ve been doing this from the start, you should not have problems with your score. However, if you had bad scores in the past because you’re not paying your bills, changing your habit would gradually improve your credit score, but it will not remove bad scores from the past. These scores would only be removed from your history after a specific number of years, usually from 7 to 10 years.

You’ll Get Better Score If You Had a Pay Raise

There are various factors considered when calculating for your credit score, including payment history, credit type, new credit, length of credit history and the amount owed. While a lot of people think that having a pay raise would improve your credit score because it would mean that you’ll have the means to pay for your loans, your salary is not considered when calculating your score.

You’ll Have a Good Score If You Don’t Have Credits

Being credit free seems like a good thing since you can pay your bills in cash and you don’t owe any amount. However, this may be a disadvantage if you decide to get a mortgage, credit or car loan in the future. Lenders would not have a credit history to check how well you manage your loans. It might cause your loan to be rejected or you might end up paying with a bigger interest rate.

Credit Reports are Always Accurate

These reports are also prone to error. There are various reasons for this like mixed up files, records not up to date, etc. This is why it’s important to take advantage of the free credit report that you can get every 12 months from the major credit reporting agencies. If you see any errors, send a request for dispute so it can be investigated and removed, if there’s really a mistake.

Paying Your Phone and Utility Bills Will Improve Your Credit Score

Paying your credit cards, mortgage, car loan and other credits on time will improve your credit score after some time. However, even if you pay your phone and utility bills on time, it will not have an effect on your score since these bills are not reported.

Proper Management of Your Savings and Checking Accounts Will Add to Your Credit Score

checking account

The proper management of your credits is considered for your credit score. However, no matter how you manage your savings and checking account it would not have any effect on your credit score. This doesn’t mean that you should not manage these accounts properly. You still should, as they can have a huge effect on your finances, though not on your credit score.

A Bad Credit Score Only Affects Your Loan Approval

The main reason for maintaining a good credit score is to have a better chance of having your loans approved at a better rate. This is no longer just the use of having a good credit score, as it can also affect your employment opportunities. More and more employers are now checking the credit history of potential employees and use this as one of the factors in determining if they will be hired or not.

You Can’t Get a Loan If You Have a Bad Credit Score

There are lenders that don’t check credit history. However, the interest rate is very high because of the risks involved.

If you want to check your credit history, you may go to Go over your report to make sure that there are no errors.

Photo Attribution:

Featured and 1st image by User:Pne [CC-BY-2.0 (], via Wikimedia Commons

2nd image by Sergio Ortega [GFDL ( or CC-BY-SA-3.0 (], via Wikimedia Commons