Skip to main content

Credit Information Back to all articles »

5 Credit Report Myths Debunked

Truth behind 5 common credit reporting myths

Myths. Folklore. Urban legend. Most people have heard them. Many of these tales were originally based on some truth, but third-party sharing, time and misinformation has created myths.

Although many myths are just fun stories to share, some myths can be harmful when believed as truth.

There are 5 myths that can cause you to harm your credit worthiness. Find out more.

Myth 1: No need to check your credit report if you always pay your bills on time

If you pay every bill on time each month, you may believe that there is no reason to check your credit report. However, everyone needs to regularly check their credit reports.

Your credit report is used as a tool by lenders to determine if they should extend credit or financing to you. You may feel safe if you are a responsible borrower. However, credit report errors (e.g. incorrect late payment listings and inclusion of accounts and personal information that are not yours) and identity theft can cause incorrect information to show on your report. These inaccuracies could cost you in the form of denied credit or higher interest rates.

You should know what is in your credit report before you apply for credit.

Myth 2: Requesting your credit report will hurt you

You may request unlimited copies of your own credit report without hurting your credit. There are two types of credit report checks:

  • Hard inquiry: Lender or finance company requests your credit history in order to decide if it will offer credit.
  • Soft inquiry: You request your own credit report.

Hard inquiries may affect your credit, but soft inquiries will not.

Myth 3: Too many credit inquiries drive down your credit score

Although hard inquiries can affect your credit score, the change will most likely be minimal. Typically, credit agencies are aware that consumers want to "shop" for the best credit deal, especially for mortgages, auto financing, and student loans.

If you have similar types of inquiries (e.g. multiple mortgage lenders checking your credit), you will most likely be seen more as a price-conscious borrower than a credit risk.

Myth 4: Credit reports only show 7 years of data

It is true that most negative information will stay on your credit report for seven years, including:

  • Late payments
  • Chapter 13 bankruptcies
  • Collection accounts
  • Foreclosures

However, Chapter 7 bankruptcies will stay on your credit report for ten years.

On a positive note, accounts that were closed in good standing often remain on your credit report for ten years.

Myth 5: All credit reports are the same

It is important to remember that the three credit bureaus (TransUnion, Experian and Equifax) are independent organizations. Although they track the same information, the credit agencies do not share information with each other.

Each agency uses its own methods to track and report data. Also, not all lenders report to all three bureaus. This means that one report may contain information that the others do not. It is important to check all three credit reports regularly.

Know what's in your consumer credit report

Don't let these myths get in the way of your good credit.

Find out what's in your consumer credit report. Enroll in PrivacyGuard today.

Back to all articles »