The Lawhead Team would like to share the latest One Cool Thing from the C.A.R. to help you understand what affects your credit score.

When it comes to credit reports and FICO scores, there is a lot of confusion about what actually impacts one’s ability to open a credit card, finance a car, or purchase a home.

Myth 1: Your credit scores drop if you check your own credit

• Truth: Viewing your credit report counts only as a “soft inquiry” and doesn’t change the score. “Hard Inquiries” by a lender or creditor, though, can slightly lower your credit score.

Myth 2: You should close old or inactive accounts to help your credit score

• Truth: Closing accounts may actually have the reverse effect of lowering your credit score because it can shorten the measured duration of your credit history.

Myth 3: Paying off a negative record means it’s taken off your credit report

• Truth: Generally, negative records like collections or late payments will remain on your credit report for up to seven years.

Myth 4: Cosigning doesn’t mean you’re responsible for the account

• Truth: If you open a joint account or cosign a loan, you will be held legally responsible for the account, meaning activity on the joint account is displayed on credit reports of both account holders.

Myth 5: Maying on-time rental, utility, and cell phone payments helps my credit score

• Truth: While outstanding rental, utility, and cell phone debt that have gone to collections can negatively affect your score, generally, on-time payments are not regularly reported to credit bureaus

Myth 6: Your credit score reflects changes or trends in your payment behavior

• Truth: Historically, credit scores have not incorporated trended credit information, meaning they are a moment-in-time glimpse at consumer risk.

Source: TransUnion