Your Credit Report Profile: Fact vs Myth

Checking your credit report profile once a year helps you gain peace of mind regarding your finances. If your credit score is high, you’ll be more eligible to receive loans, credit cards, and affordable insurance than if your score is low. It’s important, however, for consumers to not only check their credit report profile, but to understand all of the information it contains. Learning how to improve your credit score, as well as what harms your credit, is a great way to stay on top of your finances.

Credit Report Myths

Understanding your credit report profile begins with awareness of the following misperceptions:

  • You Should Close Unused Accounts – This is a common myth. People assume that if an account has been paid in full and they no longer need it, they should close the account. In fact, closing unused accounts actually lowers your credit score. This is because the extra credit afforded by the unused account increased your total available credit. If you close the account, your total available credit reduces and the ratio of credit you owe to credit available worsens.
  • Check with All 3 Reporting Agencies – Another common myth is that you must check your credit report profile with each of the major consumer reporting agencies (Equifax, Experian, TransUnion). In actuality, all three credit bureaus use the same scoring system, so your credit report profile is the same with each agency. There is no need to check your report with all three; just be sure to review your profile once a year.
  • Debt Counseling is as Bad as Bankruptcy – Many people assume that debt or credit counseling and bankruptcy equally affect your credit score. Although a credit profile contains either offense, counseling and bankruptcy affect your credit score differently. Counseling shows that you made a good-faith effort to improve your finances, which, in turn, actually adds points to your score. Bankruptcy, on the other hand, always hurts your credit score.
  • Don’t Check Your Report – Many people believe that checking your credit profile can damage your score. Though this is partly true, there is a way to avoid this penalty. A credit bureau counts multiple credit checks in a single month as only one credit check. For example, if a bank checks your credit six times in January, that counts as just one credit check. If they check your credit once a month all year, however, that counts as twelve credit checks and may harm your credit score.
Credit Report Facts

Here are some facts associated with your credit report profile:
  • Incorrect, out-of-date, or fraudulent information on your profile negatively affects your credit score. Address any errors or questionable information in your report immediately.
  • The best way to maintain good credit is to pay bills on time and in full. Never ignore bills.
  • Protect your identity by shredding all personal documents that you don’t need, shopping online with a disposable credit card, canceling a card immediately if it is misplaced or stolen, and never carrying your Social Security card or banking personal identification number (PIN) in your wallet.
  • A low credit score affects your ability to get a loan, mortgage, credit card, insurance, apartment, or even a job.



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