Credit scores: Myths vs. truth

Getting the facts gives you greater control of your credit score.

Being able to separate the truth and policy from myths and musings could be the key to better credit and smarter decision making. Explore the following myths about credit and credit scores.

 Myth: Your credit report includes your credit score.

The truth: Your credit report does not provide your credit score. You may think by getting a free copy of your credit report at you will also receive a credit score. However, if you want a copy of your FICO credit score (which is the score used by most lenders), you'll usually have to pay up to $19.95 to get it.

Consumers have the option of accessing a free credit score through a service such as However, it’s important to understand that those scores aren't necessarily the scores that lenders use. That's because "there are many different credit scores," says Rod Griffin, director of public education at Experian, and the score that gets used depends on the lender and the type of loan.

Myth: Checking your credit reports too often will hurt your credit score.

The truth: "Viewing your own credit report has no impact on your credit score," says Cliff O'Neal, senior director for corporate communications at TransUnion. "You could view your credit report every day and it will have no impact."

“However, if you give a lender permission to pull your credit report, that will affect your score,” says Equifax's Demitra Wilson. If you go to a creditor or merchant and apply for a loan or a credit card, you are giving them permission to access your credit report. That kind of inquiry is called a hard inquiry (hard pull) and it can impact your credit score. The impact from applying for credit will vary from person to person based on your unique credit history. In general, credit inquiries have a small impact on a person’s FICO score. For most people, one additional credit inquiry will take less than five points off their FICO score.

Myth: You need to carry a balance on a credit card or have an outstanding loan balance to build good credit.

The truth: You do not need to carry a balance on your revolving accounts to help improve your credit. It’s important to demonstrate that you can manage a revolving account without any problems. Making payments on-time, every time on credit card accounts will accomplish this goal. Also, paying off your purchases each month rather than carrying a balance will keep your credit-used-to-credit-available ratio (credit utilization rate) at 0%. Credit issuers like to see a credit utilization rate of approximately 35% or less.

In addition, if you can successfully manage a monthly installment account as well as revolving accounts you can end up with a first-rate credit score.

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