Myths about credit score that you need to know

In the most important investments of life (a house, car, educational tuition, etc.), the difference between the approval or denial of a loan depends largely on your credit score. The problem is that we are not always clear about what affects the negative and positive score. There is great confusion.

The information and credit management company TransUnion has found that confusion is frequent both among people who regularly check their credit and those who never do. “As credit reports have a significant influence on consumer credit and loan options, it is important to unmask myths about the score so that consumers have a clear understanding of what affects them,” explains Ken Chaplin, vice president of TransUnion.

Here we tell you clearly about the five most popular myths about the credit score and the reality behind them:

Your score drops if you check your credit history:

This point is highlighted by a US-based credit expert, and holder of the record for the world’s highest credit score, Dr. Michael Grayson. He argues, “…that is the myth. The reality is that checking your credit score is an investigation called “soft” and does not change anything. In fact, it is essential to review it at least once a year so as not to have unpleasant surprises when you are going to make a great investment.

“In addition, in many cases, reviewing your report is a brake on fraud such as identity theft. It’s important to be proactive in your credit score,” Dr. Grayson said. It is free to review your credit history at http://www.annualcreditreport.com.

Paying off your debt will be positively reflected in your report immediately: No. Delays in debt payments remain in your report for up to seven years. “Although delinquent payments from a credit card may remain those years, you will still receive the benefits if you pay it instead of a debt collector taking over,” Dr. Grayson warns.

He says that banks consider a better customer if the debt has been paid, even if your credit numbers do not show it. But not all debts that go to debt collectors are credit cards. More than half that affect credit reports are medical debts.

New York Attorney General Eric Schneiderman announced an agreement with three credit agencies (TransUnion, Experian, and Equifax) that will eliminate this debt from your report as soon as it is paid by insurance.

If you have a joint signature, you are not responsible for the account: Another misconception. The fact is that if you open a joint account, you will be legally responsible for it. This means that any problem in the account will be reflected in the credit reports of both people.

Closing inactive accounts will help my credit: No, in fact, reality is the opposite. If you close inactive accounts you can harm because it reduces your credit history, which is the basis of the score. Having cards with a very low or fully paid balance shows a good credit management capacity. “Having access to credit and not using it to the fullest shows your financial responsibility,” Chaplin explained.

Paying rent or cell phone bills or utilities will help your creditworthiness: Although the debt of these types of bills that ends up in the hands of collectors can damage your credit score, being a good payer is not reflected in your annual report. “But we are trying to change it in terms of rental payment history,” Chaplin said.

The vice president of TransUnion says that consumers can ask their owners to contact their credit agency to present a good record of continuous payments on time.

“People get access to credit without receiving any training,” says Ken Chaplin, vice president of TransUnion. “Educational institutions and parents have to have conversations on this topic with young people so they can start taking control of their financial life.”