8 credit score myths debunked

Misconceptions abound when it comes to the ways credit scores are determined. Here are some of the more egregious falsehoods surrounding the process.

By Tom Quinn, Credit.com

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12Comments
Feb 20, 2012 7:00PM
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Myth: Credit Agencies are truthful
Fact: Credit Score methodologies aren't transparent for a reason

Myth: There are credit score myths
Fact: The writer doesn't know for a fact what's true or not, he is just writing what he is told.




Feb 20, 2012 9:48PM
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Far too much emphasis is placed on credit scores. Many and perhaps most would be better off without credit.
Feb 20, 2012 8:15PM
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The  credit scores are based on wrong information. When debts are paid and they fail to inform the credit agencies , false scores are  given. Once the debt is paid they could care less about correcting the information. It is extremely difficult to get wrong information changed by the person with the questioable score. Hence when buying a car the wrong scores costs thousands of dollars in higher rates. So the finance company makes two or three times  or more by granting a loan to someone will an uncorrected low score. The paid  creditors should be required to correct the inaccurate data.
Feb 21, 2012 12:13PM
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This is he worst system in place by mankind. There is no accountability by the credit reporting agencies. They use voodoo math and really impact your life be it for purchases, rent, employment or mortgages. Inaccurate information is rampant and to get it corrected will take months if not years to resolve. There has to be a better system put in place.
Feb 21, 2012 12:06PM
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Yeah, credit is a Joke.  I was told to maintain good credit to buy a house,  I bought my house and 2 years later, they're giving houses away.  Get off credit if you can as soon as you can.  Unless you're a Susie orman fan, then you can make her all sorts of money because she has a stake in the company that produces fico scores.  Don't play the numbers game because that's all it is, a game.  One of my credit reports still doesn't  have the right name on it after reporting the problem 6 years ago. 
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While a foreclosure and a short sale will both impact your credit score, a short sale will allow you to qualify for FHA financing to buy another home immediately following the short sale if you don't miss any mortgage payments in the process. With a foreclosure you will have to wait at least 36 months and in some cases 60 months before being able to purchase another home. I think this is an important piece of information that is left out in this article.

 

Plus, settling a debt for less than what is owed via a short sale is much better for your score than just letting the debt get charged off through foreclosure. We've seen short sales only bring down a credit score by 100 points whereas a foreclosure has dropped the score by more than 200.

 

In conclusion, this writer did poor research and has left the public more stupid than before reading this pointless article.

Feb 27, 2012 11:27AM
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What most people don't understand is that the Credit Reporting Agencies are not govt agencies and are for profit organizations. They sell your info to companies like banks and dealers that's why you receive those creditcard mailers and approved dealer mailers among so many other trash in the mail. also they charge companies to report your info of credit good or bad. Their systems are so unreliable and the scores do not always reflect the reality of your situation...so many errors that they conveniently don't fix. It is a shame that our society is addicted to these types of systems that are not regulated and hurt everyone.
Feb 27, 2012 9:34AM
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   Credit bureaus are practically untouchable, you can probably get a hold of the US President faster than you can talk to them. When you get your credit from either Equifax, Trans Union and Experien they give you a number to cal that expires withing 30 days and most of the times 99% when you call they do not correct any issues with your score or erroneous entries on your report until 30 days later which then you have to request another updated credit report and if there is still wrong information on it you have to start all over again.

    Who watches the watchers and to whom do they report who is their boss and how can you get a hold of them ? . Credit bureaus do not have an office that you can go to and speak to someone in person, for Gods sake I can go to my Congressman's office or to the Senators office easier than speaking to a live person from any of the credit bureaus. They should have field offices that you can go and try correcting report issues with the assistance of someone in person. Well good luck to all  os you out there with credit issues , you are not alone.

Feb 27, 2012 8:41AM
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They missed the biggest myth of all:

 Biggest myth:

You must have a credit score or you cannot live.

Greatest fact:

Live on less than you make, do not have credit cards and do not take out personal loans.  You will have a 0 credit score; but with a little proper documentation, you will qualify for a premium mortgage through a process called manual underwriting.  The poor MBA grads of today don't even know what that is...I cherish my 0 FICO!  It took some work, but I am proud of this achievement.

Feb 21, 2012 5:31PM
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Well, after that answer, I would have to call this whole article by Tom Quinn completely unreliable.  In no way does a Short Sale have the same effect on your credit as a Foreclosure.  On a Short Sale, the banks accept the lower sale price, charge off the loss, and you receive a discharge of liability of the loss.  Once you complete/close on a Short Sale, your credit will start to rise immediately. A Short Sale is a negotiation where BOTH parties agree, as both sides understand they both will lose if it goes to a foreclosure.  Most people will be able to buy a house within 2- 2 1/2 years from the time you close on a Short Sale.  
A foreclosure stays on your credit report for 10 years, but the worst part is that the loss that the bank(s) took once they finally sold the home shows up as an unpaid debt which will drastically slow down your ability of your credit score increasing.  It will go up, but take MUCH longer than a SS. The bank/mortgage company will most likely sell off that debt to a credit collection company and hound you for years to collect their loss.  Definitely try to Short Sale if possible and make a Foreclosure your last option.  Shame on you Tom Quinn for giving out bad/inaccurate information.
Feb 27, 2012 9:47AM
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I am one who uses credit scores to evaluate people who want to rent my apartment units.  Everyone will tell you that they can pay so the use of a credit score is valuable to me.  I have found that occasionally there are conditions that make weak credit scores that the applicant has no power over.

Feb 27, 2012 2:31PM
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credit should be illegal we should go back to the trade and barter system then ther would not be need for scores, you got what I want then we do business
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