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Top Misconceptions About Scores

Credit scores can be confusing. Empower yourself by ordering your FICO score and understanding how scoring works. Make sure you know the truth about these popular misconceptions:
My score determines whether or not I get credit.
Lenders use a number of facts to make credit decisions, including your credit score. Lenders look at information such as the amount of debt you can reasonably handle given your income, your employment history, and your credit history. Based on their analysis of this information under specific underwriting policies, lenders may extend or decline credit to you regardless of your score.
A poor score will haunt me forever.
Just the opposite is true. Since a credit score is a mathematical calculation, it changes as new information is added to your credit history. Scores change gradually as you change the way you handle credit. For example, past credit problems impact your score less as time passes.

Lenders request a new current score when you submit a credit application, so they have the most recent information available. So by taking the time to improve your score, you might qualify for more favorable interest rates and other credit terms.
My score will drop if I apply for new credit.
If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report (called "inquiries") will appear on your report. Your score may drop if you open numerous accounts from different types of lenders within a short period of time. But most credit scores are not affected by rate shopping, when multiple inquiries from different lenders are made within a short period of time.
My score will drop if I check my credit report.
Self-inquiries do not affect your score, as long as you order your credit report directly from the credit reporting agencies, or through an organization authorized to provide credit reports to consumers. It's a good idea to check your credit report once a year.
People with high incomes have high credit scores.
Income might affect your ability to get a loan, but it does not affect your credit score. Only your credit history — such as timely payments and how much you owe — affects your score. Regardless of income, if you manage your debt responsibly, you can have a high score.
Credit scoring is unfair to minorities.
Scoring considers only credit-related information. Factors like gender, race, nationality, and marital status are not included. In fact, the Equal Credit Opportunity Act (ECOA) prohibits lenders from considering this type of information when issuing credit. Because the credit score is mathematically calculated, it treats all borrowers the same.
Credit scoring infringes on my privacy.
Credit scoring evaluates the same information lenders already review — the credit bureau report. A score is simply a numerical calculation based on the information contained in your credit report.
Certain information provided by Fair Isaac Corporation, San Rafael, California.