An algorithmic equation produces a result that should not be subject to interpretation. It’s a number. You can be astounded or dismayed when you see it, but the math is indisputable. That said, lots of folks will still argue over it and create conspiracy theories.
Yes, we’re talking about credit scores. They are calculated using variables that include payment history, total debt, date of oldest account, and credit usage ratio. None of these are “opinion” topics—they are numbers. If your credit score is bad, it’s because of those values.
Widely believed myths about credit scores
One of the best ways to fix a bad credit score is to get a debt consolidation loan and pay off your outstanding balances. You’ll still have the loan payments, but your interest rate will be lower. That’s real-life information, not a myth. The following is a list of credit score myths:
1. Bad credit scores last forever. Think of your credit score as a living entity. It doesn’t stay the same when you’re still making (or missing) payments to your creditors. The number will go up or down based on your credit usage and payment history.
2. Checking your credit lowers your score. You can check your credit score for free with the credit bureaus. Most credit cards also offer a credit score link of some kind. Checking doesn’t affect your score and shouldn’t cost you anything to do.
3. Only the wealthy have good credit. You don’t need to have money to have a good credit score. The calculation of your score is based on how you use the money that you have, not how much you have. Many wealthy folks have terrible credit scores, and income is not a direct factor in your score’s calculation.
4. Married couples merge their credit scores. Each partner in a marriage has their own credit score. They can lower each other’s scores by mismanaging joint accounts, but that won’t change their individual scores. And nobody merges their scores.
5. Prepaid cards can improve your credit score. There is no credit reporting component to a prepaid or debit card. They are essentially treated as cash, so they are invisible to credit reporting agencies and credit bureaus.
6. Debt is required for a good credit score. You can build credit by opening a credit card account, making small purchases, and paying off your full balance every month. You won’t go into debt doing it this way and you’ll never pay interest.
7. Employers check credit scores. Employers can check your credit report, but it is illegal for them to check your credit score. It’s important to understand the difference. The media often gets this wrong. Your credit score is personal and protected.
Sadly, these myths often cause people to mismanage their credit and do damage to their credit score. Don’t fall into this trap. If someone offers an “opinion” on how credit scores work, check the information with a reputable source, such as a credit bureau like Experian or a bank.
