Credit Scores (FICO Score) And Credit Reports – 9 Common Misunderstandings
Misconception #1: Credit scores and reports are managed by the government. – False
Fact: Credit scores and reports are regulated by laws like any other business but are not directly controlled or managed by the government. The 3 credit bureaus (Experian, Equifax, and Transunion) are companies that collect information about people in order to package and sell it to other businesses. FICO is basically a software company. Their software is what figures out credit scores. FICO sells this software to the 3 bureaus.
Misconception #2: Credit scores are just another part of the credit report. – False
Fact: Credit scores are not part of the credit report; they’re generated from the information in the report. It’s a subtle but important distinction. Your report is financial info about you gathered by the bureaus. Your score is based on this information, i.e., if you ผลบอลสด improve your report, you’ll improve your score.
Misconception #3: I have one credit report and one credit score. – False
Fact: You have three separate credit reports and three separate scores based on those reports. All of the 3 credit bureaus keep their own credit report about you. They all calculate your score based on their version of your report, and they all calculate the score a little differently. Your score can easily be a 50 to 100 points different from one bureau to the next.
Misconception #4: Credit reports are computerized, so they must be correct. – False
Fact: Credit reports are not perfect. There’s no central computer that all the banks and credit cards are connected to. If you owe money to a company, they could report your payment history to one, all, or none of the 3 credit bureaus, and mistakes do happen. According to the US Public Interest Research Group, as many as 25% of credit reports contain significant mistakes.
Misconception #5: There’s no way to actively influence my credit score. – False
Fact: Credit scores are not set in stone. Since credit reports often have mistakes, these mistakes can be corrected to improve your score.
Misconception #6: My credit score is based on my occupation and other non-financial factors. – False
Fact: Even though a lender will take these things into account (except “g”), your credit score is not based on the following:
- Length of time at job
- Things you own
- How much is in your bank account
- Race, color, religion, national origin, marital status, or sex
Misconception #7: Getting a loan is only based on my credit score. – False