Based on all the information (and misinformation) that’s out there regarding credit reports and scores, we could just as easily be discussing “The top 80 myths about your credit report.”

Joking aside, managing your credit is an important part of your financial life. We all suffer from information overload from time to time, so it’s good to know what actions can truly help or hurt your credit scores. Hopefully, we can clear up some misconceptions about credit reporting and empower some of you to start taking a more active role in managing your credit. 

1. Checking My Own Credit Report Will Hurt My Credit Score

This myth is listed first because it has stood the test of time. Checking your own credit or ordering a copy of your own credit report will not negatively impact

your credit score

.  A personal inquiry into your own credit is termed a “soft” inquiry.

An inquiry where a potential creditor or lender reviews your credit due to an application for new credit is called a “hard” inquiry.  It is these “hard” inquiries that could impact your credit score.  

So, if you haven’t checked your credit report due to a fear of hurting your score or doing harm to your financial health, put that fear aside and start reviewing your credit now.

2. All Bad Debts Or Bankruptcies Automatically Fall Off In 7 Years

This statement is only partially true, depending on certain circumstances. One type of bankruptcy, called Chapter 13 bankruptcy, (which involves the reorganization of debt may fall off of your credit report 7 years after the filing date.

Chapter 7 bankruptcy (the discharge of debt) may  take 10 years from the filing date to fall off of your credit report.  In both instances, you may want to consider  keeping track of dates and actions that have been taken in order to ensure that these records are correct and that information does not remain listed on your credit report any longer than the law states.

3. I Pay My Bills On Time, I Don’t Need To Check My Credit Repo

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This may be one of the most deceptive myths on the list.  According to a study, as many as 40 million Americans have errors on their credit reports. In 20 million of these cases, the mistakes are described as “significant”. Any error on a credit report should at the very least, be considered an important item that needs to be corrected.

Would a potential lender or creditor agree that an incorrect address or name is an “insignificant” error?  Perhaps an even worse scenario to consider is the possibility that any error could be the result of an attempt at identity theft. Regardless of how well you manage the payment of your monthly bills, consider checking your credit report regularly.

4. All Three Credit Reports Are The Same

Each credit bureau has similar credit information on you, but there can be differences. Internal reporting differences and timing variances between information updates such as address changes or new credit extensions may also exist between the three reporting bureaus. Consider regularly checking the information listed on

all three credit reports

(Equifax, Experian and Transunion) for accuracy and consistency.

5. If I Pay Off All Of My Debts, I’ll Have Perfect Credi

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Your credit is a running history of your ability to borrow money and pay it back timely and in full. If you've been late on a few payments with a certain credit card company, the act of paying off the entire balance on that card in a subsequent period will not clear the late payments from your credit report. Plus, there are many other factors that are involved in calculating your credit score.

6. Using My Debit Card Helps My Credit Score

Using your debit card is the same thing as writing someone a check for services or having money electronically transferred to pay for an item or service. There is no loan or extension of credit involved, so there is no benefit to your credit profile when using your debit card.

7. Outstanding Medical Or Utility Bills Won’t Affect My Credit

Although medical or utility bills are not reported on your credit reports, outstanding medical or utility bills that have gone into collections may indeed be reported to credit bureaus by the collection agencies. These can be very damaging to your credit since they may remain on your credit report for a long time before even being discovered. Be especially careful with medical bills, as these are notorious for being sent into collection after a very short period of time.

8. The More Money I Make, The Better My Credit Will Be

You may make more money today than you did ten years ago, but the credit bureaus don’t monitor annual earnings, nor do they use earnings figures in their credit scoring models. The mere fact that you earn more money than your neighbor or your brother-in-law does not prove that you would manage your financial matters any better than they would. So, while earning more money may make it easier for you to responsibly manage your finances, it has no direct effect on your credit score.