Credit Myths and Facts You Should Know

Viewing your Equifax credit report and Equifax credit score is a great first step to educating yourself about credit. Take our True/False quiz below to test your credit IQ:

  1. Approaching your credit limit will not impact your credit score.
     Even if you pay off your credit cards every month, if your credit utilization ratio is 30 percent or more, it may impact your credit score. Your credit utilization ratio is the amount you owe on all credit cards divided by the sum of each card’s credit limit and expressed as a percentage. Some credit scoring models may also penalize you for exceeding 30 percent utilization on any one card.
  2. You can dispute items on your Equifax credit report.
    You can dispute information on your credit reports that you believe may be inaccurate or incomplete.
  3. It’s always smart to close an account that has been paid in full.
    If you have an old, rarely used account that demonstrates a strong payment history, it will be reflected in your credit history. But it’s more important how you use your accounts and the amount of available credit you’re using.
  4. There is no one-size-fits-all solution when it comes to credit scores, credit reports and credit behavior.
    Everyone’s financial and credit situation is unique. And the same goes for how each creditor or lender evaluates your information to make their decisions on whether or not to extend you credit. 
    The one common ground is the importance of education and awareness. The more you know about how credit works in general, and the more familiar you become with your own situation, the more informed you will likely be.
  5. You have a universal or overall credit score.
    There are many different credit scores, and each may be calculated differently. In addition, your lenders and creditors may report data to all three major credit bureaus -- Equifax®, Experian®, and TransUnion® -- just one or two, or none at all. That’s why your credit score may also differ across the three bureaus.
  6. Checking your credit score will not change the score itself.
    Checking out your credit scores and credit reports does not impact your credit score, but it may help establish the right kinds of behaviors early on, and may help spot signs of identity theft. Hard inquiries — when a creditor requests to review your credit report in order to make a decision about extending new credit to you — may impact your credit score.
  7. There is a credit “blacklist.”
    Credit bureaus aren’t the ones that decide your creditworthiness – that’s up to lenders and creditors. Your credit report only contains information about the credit you have or have had, along with inquiries from companies when you apply for credit. Lenders and creditors use and interpret your credit information their own way. If you get rejected by several lenders, there may be a common factor in your credit history that drives those decisions, but there is no “blacklist.”
  8. Parking tickets and library fines are not included on your credit report.
      Things like parking tickets and library fines don't show up on your credit report. The one exception may be if an account is referred to a collections agency, as collection accounts do show up on your credit report.
  9. Your relationship status and whether or not you live alone can impact your Equifax credit score.
    The information on your Equifax credit report relates to you personally – not your relatives, partner, or former tenants. Living with someone or being in a relationship does not impact your Equifax credit score – and taking a relationship status into account when making a credit decision is against the law.  
    If you apply for a joint account with someone, such as a credit card or a mortgage, a lender will use both of your credit data to determine creditworthiness. However, your relationship status doesn’t factor into that decision.
    Also, accounts you have co-signed on with that person may affect your credit score.
  10. A good credit score does not necessarily mean your request for new credit will be approved.
    A good credit score isn’t a golden ticket. A lender may use information within your Equifax credit report and other information included on your application to decide whether to grant you new credit. While a good credit score is a strong start, each application is unique, so it’s not wise to consider a loan, credit card or mortgage a given based solely on credit score.