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The Truth About Credit

by: Emma Higgins

Update: 09/2021

We are aware that we all have a credit report, but we don’t always understand what it all means. For that reason, some myths about credit have been circling around the Internet, and they aren’t exactly accurate. In this article, we will straighten out the mess and find out what is really going on.

Myth #1: Every Time Someone Looks at Your Credit Report You Lose Between Two and Five Points.

This is not necessarily true. It is more likely to happen if you have a limited credit history or only one or two credit accounts. Therefore, if you have several credit accounts and your credit history is relatively long, your credit report will survive a few inquiries without suffering any damage. The difference is if several people are checking your credit in a shorter period of time. According to, a lot of inquiries mean that you are about to declare bankruptcy.

Myth #2: Your Employer is Entitled to See Your Credit Score.

The three credit bureaus TransUnion, Experian and Equifax do not share your credit scores with employers. Your employer may ask to see your credit report, but your credit score is not listed on this document. In order to receive your credit score, you must pay for it.

Myth #3: It Is Best to Only Use 30 Percent of Your Credit Limit at a Time.

Representatives at FICO have stated that your credit score depends on the amount of available credit that you use. For example, if you use a large amount of credit, your score will be at a very low level. If you use a smaller portion of your credit, your score will be higher. FICO discovered that members who only used between one and 10 percent of their credit had the highest credit scores. They also found that it is better to have at least one percent of their credit in use than it is to not use any.

FICO’s Consumer Affairs Manager Barry Paperno stated that there is no magic number that tells you that if you charge more than that amount, your credit score will drop dramatically, and if you charge less than that amount, your score will automatically rise. He states that it is not easy to calculate a number that will correspond to people’s buying behavior and their individual credit risk. So, it is impossible to say that using only 30 percent or 50 percent of your credit limit will result in a good or bad credit score.

Myth #4: Five Areas Make Up the Basis for Your Credit Score.

The numbers of areas that go into your credit score are in the dozens. If you visit, you will be treated to the five general areas that this company lists as contributors to your credit score. When you receive your report and score, there is a list of codes that correspond to the reasons that you do not have a higher score. These codes cannot be comfortably placed within the five listed reasons. You can obtain a copy of your report with the reason codes by requesting your credit report from VantageScore.

Myth #5: Closing a Credit Account Affects Your Score Negatively.

Credit scores are calculated by the average age of your credit accounts, and the age of your accounts is 10 percent of your score. If you close an account, the activity from that account does not disappear. If it did, all you would have to do to hide missed payments and charge-offs is cancel the account. Negative history remains on your credit report for seven years, but positive history will be there for 10 years.

Myth #6: The “0” Credit Score Exists.

In general, credit scores range from 300 to 850. Therefore, it is not possible to have a “0” credit score.

Myth #7: You Cannot Quickly Improve Your Credit Score.

Paying down the balances on your credit accounts will cause your credit score to rise very quickly, but it will take a little more time if you have several negative items. You can speed the process up in this instance by working with a credit repair company.

Emma Higgins

Emma has been helping people improve their credit scores for the past ten years and has written a number of credit repair companies reviews for us. Prior to that, she worked as a credit repair specialist and consultant for several of the best credit repair firms. She got into the credit repair industry after graduating with a degree in Finance before getting her MBA.