10 credit score truths and myths

Services for Real Estate Pros with IDTheftSecurity.com Inc

If your personal information gets compromised, a thief will open up financial accounts in your name. However, they will not pay the bills, and this will ruin your credit.

Whether bad credit results from the legitimate credit holder’s irresponsibility or from identity theft, your ability to buy a car, rent a nice place, purchase a home or even get employment can be severely stifled.

1. Credit reports aren’t always accurate. Most have a big error or mistake: 80 percent, actually. Regularly check your credit report.

2. Pulling your credit score will lower it. A “soft” pull is done yourself for personal reasons; it will have zero effect. A “hard inquiry” is when a lender pulls it up for loan approval. It will have a negative impact, but small.

3. A higher income = higher credit score. Income is not relevant to credit score; paying bills on time (or not) is what matters.

4. Credit scores and credit reports are the same. The three big credit reports are Equifax, Experian and Transunion. But there are too many various calculations of credit score to even list here. What matters is your credit managing skills and making sure all 3 large credit bureaus have similar information and scores.

5. Debt settlement removes debt from your credit report. But debt settlement doesn’t fix bad credit. Late payments, bad information and other smears remain for up to seven years following the first “infraction” date.

6. Cash-only payments will improve credit score. You can’t build good credit unless you use credit—and wisely. Get a couple small loans or credit cards and pay them off as you use them.

7. Improve your credit score by closing your credit card accounts. Closing a card lowers your amount of disposable income: the ability to pay off other debt. You don’t want to lower “credit utilization” by closing out a card.

8. Smart management of your various banking accounts will reflect in your credit score. These are not reported to credit bureaus and thus have no impact.

9. Dispute accurate (but negative) information to remove it from your credit report. You can dispute only mistakes. A valid dispute will result in deletion of inaccurate information. A dispute of negative, but accurate, information will achieve nothing.

10. Missed payments that aren’t reported to credit bureaus won’t affect credit score. Any missed or late payment can be reported to a credit bureau.

Robert Siciliano is an identity theft expert to BestIDTheftCompanys.com discussing  identity theft prevention. For Roberts FREE ebook text- SECURE Your@emailaddress -to 411247. Disclosures.

Comments (53)

Steven Brand
Hancock Mtg Partners - Stillwater, MN
NMLS# 261849

Very good stuff.  There is SO much mis-information out there about credit and credit scores.

I was meeting with a customer the other day and making a couple basic suggestions and explaining how the credit bureaus don't want to give us EXACT info on how they score so we can't manipulate them... and he said "so my credit score is kinda like my girlfriend... I really don't understand how she ticks but I know if i treat her nice... she'll be nice to me?".    Me:  "um... yeah, that sounds about right."


Jan 21, 2014 07:16 AM
Aaron Jay
City of Trees Realty - Chico, CA
-Keepin' it Real...Estate!-

Good information. There are so many factors including the ones you listed that can effect one's credit score.  Most importantly, veryone one should be taking advantage of their yearly free credit reports to monitor their accuracy. 

Jan 21, 2014 09:15 AM
Hella M. Rothwell, Broker/Realtor®
Carmel by the Sea, CA
Rothwell Realty Inc. CA#01968433 Carmel-by-the-Sea
Ive never liked the idea going into debt in order to prove i can pay it back in a timely manner Just pay your bills on time and don't max out your cards. K
Jan 21, 2014 09:56 AM
Jim Taylor
Keller Williams Realty - Nashville, TN

Valuable information and written very well!

Jan 21, 2014 11:00 AM
Rosie Moore
Serving Sugar Land, Richmond, Rosenberg, Missouri City - Sugar Land, TX

This is an excellent list you compiled. I read that if your credit is pulled by multiple lenders during a 45 day period, it won't impact your score greatly because credit bureaus know that you are shopping around for the best loan terms. Credit inquiries make up only 10 percent of your credit score.

Jan 21, 2014 12:02 PM
Cathy Wolters
Wolters Realty & Property Management Company - Cocoa, FL
Your Brevard County Property Management Expert

Lot's of great information.  I know that some people are not aware that income and bank accounts do not matter on credit reports.  

Jan 21, 2014 12:08 PM
Ralph Gorgoglione
Maui Life Homes / Metro Life Homes - Kihei, HI
Hawaii and California Real Estate (310) 497-9407

I always love reading about credit report myths!

Thanks for putting this together.  Great info!

All the Best,

The Ralphster

Jan 21, 2014 12:29 PM
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Robert, this is excellent information about credit scores.  Many of the scoring practices are counter intuitive.

Jan 21, 2014 02:03 PM
Dan Derito
Success! Real Estate - Brockton, MA

I would love to print this and send it to several clients. You have explained the process in very clear terms. Nice post Robert


Jan 21, 2014 08:27 PM
Henry Rodrigues
Keller Williams Boston Northwest - Concord, MA

#9 is not accurate.  Under the Fair Credit Reporting Act the onus is on the credit bureaus to verify any disputed information within a certain amount of time.  If the item can not be verified it must be removed.  Many people use this tip to remove negative items from their reports.  In a lot of cases the credit bureaus simply do not meet the required verification time limits and must remove the items.  Your credit scores will see the immediate benefit.

Jan 22, 2014 12:32 AM
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Great post.....love it.  I post on the top 5 things about once a year, but this is so "all encompassing."  Kudos on your response!

Jan 22, 2014 12:34 AM
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

Very informative. I am copying this off to keep and refer to , esp with first time buyers!

Jan 22, 2014 01:48 AM
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

Great list- I will be forwarding it to some clients of mine that have been working on improving their credit.

Jan 22, 2014 02:05 AM
Paddy Deighan MBA JD PhD
federalfinanciallawgroup.com - Vail, CO
Paddy Deighan J.D. Ph.D

#7 hit home because I have had many clients tell me that they are going to close accounts prior to loan application and I have always advised them not to do that

Jan 22, 2014 02:11 AM
Centerville, KS

Great info here, in todays lending world your credit score plays such a huge roll in interest rate and amount financed.

Jan 22, 2014 02:49 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Good post and there were a few things in there I learned.

Jan 22, 2014 03:35 AM
Marti Steele Kilby, CRS
Steele Group Realty - La Mesa, CA
Broker/Owner, San Diego, CA

Great post!  I think your first point is the most important. Check your reports often!  I worked for nearly 5 years as a loan officer and it was rare that I came across a credit report with no mistakes. 

Jan 22, 2014 06:46 AM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Good list Robert. I only challenge #9. I have had many a client come to me and state facts regarding a VALID delinquent acct and I get them removed regularly. Its a sick game being played but for now its still very possible but the best thing is to PAY your bills on time and DONT overextend yourself and you wont have to worry about derogatory accts

Jan 22, 2014 12:14 PM
Jane Chaulklin-Schott
TEAMCONNECT REALTY - (407) 394-9766 - Orlando, FL
TeamConnect Luxury Homes - Orlando, Florida, 32836

Thank you, Robert. Always an important post especially on reminders to keep a watchful eye on our credit report. I was just thinking yesterday to do my annual check in.

Jan 22, 2014 03:49 PM
JC Melvin - Commercial & Business Broker
JC Melvin - KW Southwest - Las Vegas, NV
The ONE Thing Workshop Trainer

Robert, thanks for providing this valuable, yet somewhat unknown information about your credit scores.

I appreciate it.

JC in Vegas 

Apr 18, 2014 02:37 AM