Endless myths and misconceptions about the factors affecting credit scores are as abundant and varied as the scores themselves. This post will help you to separate fact from fiction.  

Most loan officers, (and probably a lot of sharp agents out there,too!) already know the answers to these questions.

Here's a simple way to test your credit knowledge on some of the most common credit myths by answering the questions below:   

Q: True or false; Closing accounts helps your credit score.

A: False. While it's true that having too many lines of credit open can be damaging to a credit score, once a line of credit is established, closing it can actually lower scores. Credit scores compare the difference between available credit and the credit that's being used. Shutting down accounts lowers total available credit, making the credit balance appear larger than it actually is, and hurting scores in the process. Scores also track credit history, so shutting older accounts can make credit history look younger than it actually is, thus hurting scores. A better solution is to pay down credit card debt.  

Q: True or false; You don't actually have to use credit to get a good credit score.  

A: False. Credit scoring formulas (like FICO) are designed to judge how well a consumer pays bills on time over time. If credit is never established, or the credit that is available isn't used occasionally, it's more difficult for the formula to make a fair assessment. Sadly, failure to maintain a credit history could result in higher premiums when the time comes to secure a large loan.   Many conventional first and second mortgage products require a minimum number of active credit accounts, and also often require that those accounts be opened and maintained for a minimum of 12 months or more.

Q: True or false; Checking on your own FICO score can hurt your credit.  

A: False. Ordering a copy of your own credit report or credit score doesn't hurt.  Applying for new credit, however, can lower an individual's score. To minimize the damage from credit inquiries when shopping for a mortgage, make sure that multiple inquiries are made over a short span of time. The FICO scoring model treats multiple inquiries in a 45-day period as just one inquiry and ignores all inquiries made within 30 days prior to the day the score is computed.  

Q: True or false; A FICO score is the same score at all three major credit bureaus.  

A: Technically, this is a "trick" question, because Experian, TransUnion, and Equifax all actually use the same formula developed by Fair Isaac Corporation, but they each give the scores a different name and they don't all share the same raw data when determining scores. One bureau may list certain accounts over others and these variances across the three bureaus result in three different credit scores. Due to these subtle differences, it's always smart to pull and examine credit scoring from all three bureaus before applying for a big loan. Many lenders use the middle score from the three bureaus when making their decisions, so fixing errors in all three reports before shopping for a mortgage loan is wise.