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Busting 4 credit score myths

One benefit of the financial crisis is that people have become more knowledgeable about credit reports and credit scores. But some false beliefs persist.

By Karen Datko Feb 15, 2011 1:23PM

This post comes from Jim Wang at partner blog Bargaineering.


With the economy improving and consumer spending on the rise, I've been getting a lot of credit report- and credit score-related e-mails. With more people buying things, some of which will inevitably be on credit, folks are looking to make sure they don't make any mistakes that could jeopardize their good credit scores and increase their borrowing costs.

I like the fact that people are becoming more conscious of their behavior and how it affects their financial lives. It's one of the more positive side effects of the financial crisis.

Unfortunately, there are still a few ideas out there about credit that are flat-out wrong.


While I'm no credit expert, I've been reading enough experts and am able to separate the fact from the fiction.

Myth: It hurts your score to check your credit report.

False. Very, very false. It doesn't hurt your score to check your own credit report and it never will. Remember that the purpose of a credit score is to determine how likely you are to default on a loan. Whereas a request by a bank could be a sign that you're looking to borrow money, which is often seen as a warning sign (people who need to borrow money are often viewed as in a more tenuous financial situation than people who don't, a classic catch-22), the same can't be said for people who are just making sure their information is accurate.

So check your credit report annually for errors via It won't affect your score.


Myth: It hurts your score to check your credit score.

False. Normally, when you check your credit report for free, you don't get your score. You usually have to pay for it, unless you use a service like Credit Karma. (They provide a TransUnion credit score based on TransUnion credit data. This is not a FICO credit score.) Regardless of how you check your score, it won't affect it. This follows the same logic as checking your credit report. Post continues after video.

Myth: It hurts your score to shop around for the best loan.

False. It's not surprising to hear that many people believe this because we all understand that hard inquiries by lenders hurt your score. If you request a quote from a dozen banks, that's a dozen hard inquiries, right? Yes, but the creators of the FICO credit score understand that this is a common practice and they take that into account. Hard inquiries made by lenders while you're shopping for loan rates likely will either not impact your credit score at all or will collectively count as a single hard inquiry.


Myth: It won't hurt my score if I ask my banker friend to do me a favor and check my score for free.

False. Unfortunately, this will hurt your score as much as any other hard inquiry, even if your friend doesn't charge you a penny for it. To the credit bureaus, it looks like any other hard inquiry because they just see a bank requesting your score. When you pay for the service, the bureau is made aware that this is your request and treats it accordingly. When your banker friend pulls your score, they simply see a bank.


For many of you, these aren't myths because I've written about them in the past. Unfortunately, I think we're in the minority when it comes to financial education because I get e-mails weekly about these very topics. That said, are there any other myths that you once believed or that your friends and family believe that you want to see rebuked?


I won't be able to shatter any myths "MythBusters"-style with Buster (my personal favorite is when they hit him with a truck to see if they could knock his socks off) but I can try.


More from Bargaineering and MSN Money:



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