Precisely how your credit score is calculated is a company secret, just like the recipe for Kentucky Fried Chicken®. So it’s no wonder people have faulty information about credit scores. But professionals really ought to be more careful about the advice they pass along. Here’s a few myths debunked.
Requesting your credit score will cause it to go lower.
Too many inquiries on your account can lower the score a little. But ones you make yourself don’t count. Ones that credit card companies make when they pre-approve you don’t count either. If you are going to have several inquiries made (say you’re shopping around for the best mortgage) do it all at once, since inquiries made within two weeks of each other all count as a single inquiry.
If you get a credit card and make regular payments each month, you’ll build up good credit.
This is one of the few things you can do to raise your credit score (beyond just eliminating things that lower your score.) But it certainly isn’t the whole picture. Your score depends on your credit history, your payment history, your outstanding debts, what types of credit you have, and matters of public record.
Closing accounts will raise your credit score.
Not opening the accounts in the first place would have kept your score higher. Once the damage is done, closing the accounts won’t help. You would be better off having more moderate balances on a few different cards than only one maxed-out card.
Once you pay off a debt, it’s gone from your credit record.
It would be nice if a history of late payments would disappear as soon as the debt was fully paid off. Unfortunately, it doesn’t work that way: negative marks will remain on the report for seven years. However, they do look more closely at recent behavior. If you’ve had a good payment history for the past year, it will outweigh many past transgressions.
Credit counseling will badly damage your credit score.
It won’t affect your score one bit. For the last three years, it hasn’t had any effect on the FICO score at all. But that doesn’t mean creditors will like it. Most creditors will see it as a liability, even though it’s been statistically shown that it isn’t one (which is why they stopped using it to calculate the score).