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Online Credit Report Score: The Myth And The Reality |
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Three magical digits make up a number in your online credit report score ranging from 300 to 850, which categorizes you financially. This is your online credit report score, or FICO score which provides a deep insight into your financial life and is scrutinized by lenders, landlords, insurers, utility companies and even employers before they grant you any kind of credit, rent you an apartment, give insurance cover, or offer you a job or promotion as the case may be. However, the significance of this all-important number is not understood by nearly half of all Americans, according to a survey. The findings of this survey, conducted by the Consumer Federation of America (CFA) and Fair Isaac Corporation, revealed that 49% of respondents do not understand that credit scores measure a person's credit risk, while 45% think, incorrectly, that a higher income will result in a higher credit score. Realizing this, CFA and Fair Isaac prepared a free brochure now available online. There are a few myths about credit scores in the online credit report, which are being explained below. 1. You only have one online credit report score: Actually each of the three major credit bureaus provide your credit scores, which can vary by as much as 50 points or more. It is, therefore, advisable to check all your three scores. 2. Checking your own credit will lower your score: As long as you check your credit score via the bureaus or a legitimate score seller like MyFICO.com rather than, say, at a car dealership, you can do so as many times as you like without in any way negatively affecting your score in the online credit report. 3. Your age, income, and sex are factors affecting your score: This is not true. Experts say that these factors do not influence your online credit report score. Although your employment is listed on the credit bureau report, but it doesn't affect the score itself. 4. A high salary boosts your score: As your net worth and income do not form part of the factors affecting your score, earning more money, winning the lottery or inheriting a fortune will not improve your score whereas paying off your debts will. 5. Disputing will remove negative information: Some credit repair companies might promise to remove negative, though accurate, information from your credit report instantly to improve your score. This is a myth and you should not fall for it as credit agencies not only investigate disputes quickly, but also recognize a sham when they see one. If any information is legitimately inaccurate, you must dispute it and credit agencies are obligated to investigate credit inaccuracies within 30 days or remove disputed information from your online credit report. 6. Shopping for a loan impacts your score: If a creditor checks your online credit report when you apply for a loan or get pre-approved, this will show up as an inquiry to your credit and too many such inquiries might lower your score. However, you can shop around for a mortgage, home equity loan or car loan without worrying about damaging your credit as long as the same kinds of inquiries are made within 14 days of each other in which case they count as one inquiry on your credit score. Credit cards are not covered by this grace period. 7. Credit card offers will hurt your score: As long as you don't respond to credit card solicitations and use all of the credit that's available to you, such solicitations won't affect your score. The number of credit cards that you hold is not important, but if the ratio of credit used to credit available is high, that indicates higher risk. You should keep balances below the available credit line. 8. Your credit scores are merged when you get married: Your credit information does not get mixed with that of your spouse when you get married. Your good or bad credit is yours and yours only till your death. If you open joint accounts, that information will be reflected on each of your online credit report, for better or for worse. |
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