credit scoreA good credit score is one of the basic building blocks to financial stability. However, even well-informed consumers may still believe in one or two of the commonly-believed myths about those crucial three digits.

"We're seeing a lot of myths out there and a lot of misperceptions consumers have about their credit scores," says Melinda Opperman, senior vice president of community outreach and industry relations at Springboard Nonprofit Consumer Credit Management.

WalletPop asked these financial educators and industry experts to share and dispel the most common fallacies surrounding credit scores. Here's the real truth about your credit scoreMyth: Paying your bills on time and carrying a balance on your credit cards will give you a good credit score.

Yes, making payments on time is important, since late payments can drag down your score significantly, but it's not enough to ensure that your score will be high. That's because 30% of your credit score is based on what's called your utilization ratio - how much of your available credit has been tapped at any given point.

"Folks think they have to carry a balance on their cards in order to get a good credit score," says Opperman. "We let them know they just have to make a purchase and then make a timely payment." If you have cards with high balances, even if you make your minimum payments promptly every month, the large amount of debt you're carrying makes you look like a higher risk to the credit bureaus and will reflect poorly on your score.

Myth: You have to make a huge financial mistake for your credit score to be negatively affected.

Bankruptcy? Foreclosure? Sure, those kind of economic calamities will deliver a big hit to your score, but you don't have to be fielding collection calls at all hours for your score to suffer. In fact, just one late payment can be detrimental, and something as innocuous as opening a slew of store credit cards for the promotional discount can make you look like a credit risk, according to the credit scoring formula.

"One common myth is that credit scores are static, that they don't change that often or that you have to do something huge for them to change," says Natalie Lohrenz, director of counseling at the Consumer Credit Counseling Service of Orange County. But since a credit score is just a snapshot of your credit's health at any given time, it's going to vary at least a little bit from time to time. To put it in more concrete terms, you wouldn't expect your blood pressure to be exactly the same every time you go to the doctor, right? Your credit score goes up and down just a little bit the same way. Conversely, since your score is in constant fluctuation, you shouldn't stress over a point here or there, Lohrenz says.

Myth: The only part of your credit history that matters is your three-digit score.

Terry Clemans, executive director of the National Credit Reporting Association, says many Americans only focus on their score number, to the exclusion of their actual credit report, from which the score is derived. Lohrenz agrees and add, "People shouldn't really obsess so much about the score. Watch the report." In fact, the report is at least as important as the actual number, which is why experts recommend checking it regularly for outdated or erroneous information that can lower your score.

If you don't want to pay for a credit report, you can get one free once a year from each of the three bureaus at, and if you live in certain states, you may be entitled to additional copies. Monitoring your report regularly not only cuts down on your risk of identity theft (since you'll be able to see if someone is trying to obtain credit in your name) but gives you a better sense of how your financial activities are displayed to lenders.

Get Your Credit Score

Checking your score won't lower it!

Myth: You can improve bad credit quickly.

You really can't blame ordinary Americans for falling prey to this myth, given that there's an entire industry that purports to boost your credit at warp speed. "One common myth is 'If I want to improve my credit, I have to go to a credit repair agency,' " says Barry Paperno, consumer operations manager for As we've discussed before, companies that promise to "clean up," fix or increase your credit score are bad news. At best, they'll blanket your creditors with frivolous requests to review your outstanding debts, which might raise your credit score for a few weeks at most. As far as correcting any erroneous information that might be dragging your score down, you can fix that yourself - for free - by following the instructions on each bureau's website.

While negative notations do stay on your credit report for seven years, Paperno says this doesn't mean your credit will be low for nearly that long. The scoring formula places more weight on recent transactions, so if you had a period of financial instability or irresponsibility in your past, the best way to see your score improve is just to keep paying everything on time now, and paying down big balances to improve your utilization ratio. "The best way to improve your credit score is work with your local bank or credit union and then make timely payments," says Opperman.

Myth: A divorce dissolves jointly-held credit accounts.

When in the midst of a divorce, too many Americans fail to ask how their creditworthiness could be harmed by their former spouse. This is unfortunate, because joint liabilities can come back to haunt you. "Divorce attorneys are not financial counselors," says John Ulzheimer, president of consumer education for "That's not their job, but that's something you have to address."

"If you're a joint account holder, you're equally responsible for that balance," says Paperno. "You need to keep an eye on it, and you need to check your credit regularly to make sure that bill is getting paid." If your spouse promises to keep current on payments on a jointly-held account and fails to follow through, Paperno warns, "Be aware that will impact your score."

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Do yourself a "HUGE FAVOR" and carefully read this:

The 21st Century Act: Final Amendments to Regulation CC Section:
"Prohibits" reimbursement of Credit, Loan, and Finance Balances to a "Bank Entity" leaving only "Nonbank Consumers" able to receive reimbursement, as specified on Pages 85 and 86.

The 21st Century Act states on pg. 85 and 86 that "Only Nonbank Consumers can suffer losses and File for
Re-credit or Re-claim on any Accounts under the Federal Reserve System" also “Any Second or Third Party Presenters utilizing a Banks Documentation, Contracts and/or Agreements to seek Claims shall be considered to be that Bank under the Rules and Regulations”, the Expanded Definitions also includes Credit Cards and Home Equity Lines of Credit.
Also on Pages 100 and 101 "In any Financial Claims the Indemifying Bank (Parent Bank) must be Identified".

(Left-Click to Search Link)
21st Century Act: Final Amendments to Regulation CC

This Federal Law signed January 1, 2006 makes it "Fraudulent" and therefore "Illegal" for the 3 Major Personal Credit Reporting Agencies: Equifax, Experian, and TrasUnion to allow the Banks and the Banks "Third Party Presenters" to place any claim of "Negative" or "Potentially Negative" Accounts on your Personal Credit Based upon the fact that they have no "Legal Grounds or Claim" to the Money.

This is an "Unfair Practice" that diminishes our Financial ability to support ourselves and adversely affects our ability to gain work in many areas which breaks "Antitrust Laws".

These Rules also back claims of: "Aiding and Abetting" Racketeering and Extortion (of Finance Accounts and Personal Credit Reports), Pandering (of Credit and Loan Accounts, and Conspiracy to wit), Theft, Fraud, Federal Mail Fraud, and Telephone Harassment. Also "Threatening of the U.S. Financial Infrastructure", which is a "Capital Crime".

In order to engage the Federal Trade Commission to act against this injustice we must File many Claims, as these Reports must be Filed by a large number of people in order for the Federal Trade Commission to pursue
"Legal Action".

(Left -Click to engage Email Address)

This is way easier than "Occupying Wall Street"!

March 11 2012 at 4:52 PM Report abuse rate up rate down Reply

Great article,

Also people have to know that most of credit reports contain a lot of mistakes, which can be discussed.So first thing is to get your 3-in-1 credit report (You can get it for free from companies like: - , there you also will have a credit monitoring and fraud alerts).After that you have to read your report carefully and to see are there any mistakes.If so, you can dispute them directly to all main agencies (Equifax, Experain and TransUnion).Don't use companies for credit repair, most of them are scams.These agencies support their own dispute centers.You can find them on their sites.

January 12 2012 at 2:58 AM Report abuse rate up rate down Reply