Misunderstood Credit Facts PDF Print E-mail
Written by Jonathan Telbot   
Sunday, 12 April 2009 11:07
Lets take a look at some common misconceptions regarding credit scores and the mighty credit rating.
by JonathanTelbot


Lets take a look at some common misconceptions regarding credit scores and the mighty credit rating.

False: Credit scores are how lenders determine credit worthiness. True: Most lenders and financial institutions understand that everyone at some point can hit a bump in the road and have their credit score suffer as a result. They will take look at your debts vs. your income to see if you can pay all your bills with addition of a new one. They may also look at assets like investments and leverage them.

Misunderstanding: If my credit score is effected it will never recover. In truth: Your credit score is a way of telling credit lenders of the risks involved with lending money to you. It represents what has been going on for the last few months to a year. As such it is constantly changing and if you have hit a rough patch so long as you dont claim bankruptcy, your credit will recover (depending on how bad it is it can take a year or so).

Misunderstanding: Pulling up my credit score is an infringement on privacy. In Truth: Credit scores and reports are subject to very strict laws and may only be pulled with your permission. The information on credit reports only contains the info that is relevant to the lender. Things like, race, status, if you are married is not disclosed and lenders do not have the right to inquire about them. Typically a lender will only pull up your credit score, in which case it is simply three numbers.

There is way too much stress when it comes to credit scores. In truth all you have to do is pay the bills on time and meet the minimum amounts. Even if you fell behind remain consistent and the score will go back up.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

Jonathan Telbot has been working as consumer credit counseling with over a decade of experience and is a great contributing author of the CCR. For information and resources concerning credit and debt management visit our site at Evergreen Credit Union and CCR.