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7 Major Myths about Credit Reports Consumers Continue to Harbor

October 17, 2017

Not many people are aware of what goes into their credit reports. This is ironic, because an individual’s credit report not only indicates what kind of a house or car she possesses but, in certain cases, also the sort of job she has. Unless a consumer has a comprehensive idea regarding her credit report, she may waste time worrying over imaginary blemishes, or perhaps disregard genuine problems completely. To bust some common myths about credit reports, and to give you a clearer picture about what they entail, we’ve put together the following list.

Myth #1: Your Credit Report Also Tells You Your Credit Score

Credit reports are compiled by the three main credit bureaus - Experian, Equifax and TransUnion. Once a year, at AnnualCreditReport.com, you can access your credit report for free from each of these bureaus. This means that every four months you can get a credit report without paying a cent. On the contrary, to obtain your FICO score (the most popular score used by lenders), you usually have to pay a fee to the scoring agency.

Myth #2: Checking Your Score Hurts Your Credit

An inquiry into your credit report can be of two types – hard and soft. Hard inquiries take place when you apply for a loan or credit card, and may impact your score negatively. Soft inquiries are the result of pre-screened loan offers and may even happen when you check your own report. Nevertheless, these do not hurt your credit.

Myth #3: If you pay your bills on time, you don’t need to check your report

Sometimes, even if you pay your bills on time and your record is untarnished, your report may not reflect correct or updated information. This is because the data furnisher might not be carrying out their duties in a diligent manner. You may even be a victim of fraud or ID theft. But you’ll only find out if you check your credit report at regular intervals.

Myth #4: Paying Off a Past Due Account Will Remove It from Your Report

If you have a negative mark on your report, such as a missed payment or bankruptcy, it won’t go away if you pay it off. The only way it will fall off is after the passage of seven and ten years respectively. However, if you make good on the account, your report will at least be updated to show that you’ve caught up on the past-due balance.

Myth #5: Paying Off an Old Account Will Keep It on Your Report for a Longer Period

Many consumers believe that if they pay off a past due account, it will restart the credit reporting time clock and the debt will remain on their report for another seven years. This is incorrect.  For example, suppose you missed a credit card payment in January 2016 and caught up with it in February of 2016. If you continue to pay regularly after that, the blemish will fall off your report after seven years in January 2023.

Myth #6: A Marriage Will Merge Your Credit Report with that of Your Spouse

Even after marriage, you and your spouse will continue to have different credit reports. However, if you have joint accounts or co-signed a loan, these will appear on both your credit reports.

Myth #7: Credit Bureaus are Responsible for Granting Credit

Credit agencies such as Equifax, Experian and TransUnion merely collect credit-related information regarding the accounts and payment history of a consumer - and keep it in one place so that lenders can obtain and use them when required. The decision of granting or denying credit lies with the creditor alone.

Hopefully, the above listed points will help you get a better idea about your credit report and encourage you to keep better tabs on your credit. A good credit report, and consequently a good credit score, can benefit you in various ways. For starters, they enable you to obtain mortgages, car loans and business loans at favorable interest rates. In fact, at Fund&Grow, we assist clients with good credit in obtaining as much as $250,000 of unsecured credit at 0% interest for a period of 6, 12 or 18 months. For a fee, we not only explain the process but also take care of most of the paperwork. So if you need this kind of funding, call us at (800) 996-0270, and we will help you out as soon as possible.

Ari Page Ari Page is the CEO of Fund&Grow. He resides in Spring Hill, Florida with his wife and two children.

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