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Published February 13, 2019

Debunking Credit Score Myths

Credit Score Myths

Improving your credit is possible, but it’s hard to know where to start. There is a lot of misleading information out there, and these credit myths can get in the way of improving your credit score.
Your credit score is important for determining things like whether you’ll be able to qualify for a loan or credit card offers and the interest rate you’ll pay.

A good credit score gives you more options for your financial journey so it’s important to be confident when managing your credit. Here are some of the most popular credit myths debunked:

Myth #1: Checking my credit report will hurt my credit score.

Fact: Getting your free annual credit reports will not hurt your credit scores, and can be an important tool to make sure your information is accurate and up-to-date.

Requesting your free annual credit reports or purchasing your credit report will not affect your credit score. You can – and should – get your free credit reports from AnnualCreditReport.com every 12 months. Reviewing your credit reports regularly gives you an opportunity to quickly identify and fix any inaccurate information.

Myth #2: I only have one credit score.

Fact: You have multiple credit scores.

Many credit scores are available to you and lenders. Often, the score you see isn’t the exact same as the one the lender sees. Your score depends on which credit reporting company provided the information used to calculate the score, the scoring model, the type of loan you’re seeking, and even the day when it’s calculated. Because of this, it’s normal to see slightly different numbers throughout the year and from different sources.

Myth #3: Getting loan estimates from multiple lenders will hurt my score.

Fact: Shopping around for credit and comparing loan offers can help you find the best terms and won’t impact your score much if done in a short period of time.

Comparing offers before getting loans and credit cards can help you find the right offer for your needs. Shopping around for credit cards, auto loans, and home mortgage loans could mean paying less in the long run because you’re taking time to find the best rates and terms. For most people, any negative effect on your score from multiple requests or inquiries for your credit score or report will be small, while the benefits of shopping around could be significant. You can also minimize any negative impact by doing all your rate shopping in a short amount of time.

Myth #4: Carrying a balance on my credit cards will improve my credit score.

Fact: Paying off your credit cards in full every month is the best way to improve a credit score or maintain a good one.

Part of your credit score depends on the amount of credit you have versus the amount you’ve used – known as the credit utilization ratio. You can get your ratio by dividing your total credit card balances by your credit limits.

Keeping a low credit utilization ratio—under 30 percent—shows lenders you’re responsible and have available credit, so it’s important to pay off your entire balance to keep the ratio low to strengthen your credit score.

Myth #5: You can pay companies to quickly fix your credit.

Fact: Only the passage of time, and good credit management, will make accurate negative information disappear from your credit reports. You cannot speed up the process, and neither can a credit repair company.

Any person or company that advertises a quick fix for a price may be scamming you. There’s no quick way to boost a credit score when all the information on a credit report is correct.
To improve your credit standing:

  • Consistently pay your loans on time
  • Keep your credit balance low
  • Fact check your credit reports and dispute any errors
  • Only apply for credit that you need

Myth #6: There are only three companies that create the credit reports lenders use to decide my loans options.

Fact: Equifax, Experian, TransUnion are the three nationwide credit bureaus. But, there are also other kinds of consumer reporting companies.

These companies may use information such as your employment history, transaction history with a business, or repayment history for a particular product to create a credit or consumer report about you. Generally, these reports are used for purposes other than lending, like employment, tenant screening, insurance etc.

Many consumer-reporting companies in addition to the three nationwide credit bureaus also offer a free copy of your report every 12 months. However, some do charge a fee for you to get your report. The Consumer Financial Protection Bureau has put together a list of consumer reporting companies along with information about how you can get copies of your reports.

Looking for more information about credit reports and scores? Whether you have questions about what to look for on your credit report, common credit issues, or how you can get and keep a good credit score, The Consumer Financial Protection Bureau has resources that can help.

© Copyright 2019 Consumer Financial Protection Bureau. All Rights Reserved. 

 

March 13, 2019

Living Paycheck to Paycheck? Regain Your Financial Independence


Paycheck to Paycheck
If you aren't currently living paycheck to paycheck, chances are you know someone who is. A 2018 Survey by CareerBuilder found that 78% of U.S. workers are living paycheck to paycheck, and more than 25% do not set aside any savings each month.

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February 27, 2019

How to Choose the Charity That’s Right for You


Choosing a Charity
For many of us, the desire to help those less fortunate comes from how we were raised. If your parents gave to charities, chances are good that you will too. Giving is nurture, not nature, so if you come from a giving household, supporting charities might very well be part of your mental DNA.

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February 13, 2019

Debunking Credit Score Myths


Credit Score Myths
Improving your credit is possible, but it’s hard to know where to start. There is a lot of misleading information out there, and these credit myths can get in the way of improving your credit score.

Continue Reading

January 30, 2019

It’s Tax Identity Theft Awareness Week — Are You Ready?


Tax identity theft
Ready for tax season? If you haven’t heard about tax identity theft, you may not be.This week is Tax Identity Theft Awareness Week. Tax identity theft happens when someone files a phony tax return using your personal information — like your Social Security number — to get a tax refund from the IRS...

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January 23, 2019

9 Housing and Mortgage Trends to Watch for in 2019


Housing and Mortgage Trends
It’s going to be a challenging year for homebuyers in 2019: They will continue to compete for a short supply of homes. Home prices and mortgage rates are likely to keep moving upward, bruising affordability....

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January 3, 2019

Meriwest Credit Union Exemplifies the Credit Union Motto of “People Helping People”


People Helping People
As a local, community-based credit union, Meriwest knows first-hand that the closer you are to a community the better you’re able to understand their needs—and with 2019 kicking off, we can now reflect on the impact that Meriwest Credit Union and our employees have had on the community...

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December 26, 2018

5 Top Habits to Help You Stress Less About Your Finances


Habits to help you stress less about finances
If your finances are a constant source of stress and anxiety, you’re certainly not alone. In fact, 40 percent of American adults say they would have a tough time covering an unexpected expense of $400 or more, according to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2017...

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December 5, 2018

How to Set Yourself Up for Success During the Holidays


Success During the Holidays
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November 21, 2018

What Are the Benefits of CO-OP Shared Branches?


Benefits of Co-op branches
Credit unions have a reputation for community involvement, but they also have an extensive national footprint. That’s good news for customers at many credit unions, who have access to thousands of branch locations through CO-OP shared branches...

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November 7, 2018

7 Habits of Highly Successful Savers


7 habits of highly successsful savers
For more than 25 years, CEOs, business leaders, and entrepreneurs have cited Stephen Covey’s The 7 Habits of Highly Effective People as the business book that transformed their thinking and launched their success...

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October 24, 2018

How to Create a Budget You Can Live With


Creating a budget
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October 10, 2018

How to Create a Resilient Retirement Plan


Living at home?
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September 26, 2018

Living at Home? It’s a Smart Way to Chart a Financial Future


Living at home?
If you are a young Millennial living at home with your parents, you’re not alone. According to Pew Research people 18 to 34 years old who are living with one or both parents is now the most common living arrangement for this age group – 32 percent of Millennials are doing it...

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September 12, 2018

What Are Credit Unions And How Can They Help You?


Credit Unions
The euphoria of getting a paycheck has probably been tempered with the reality of bills and savings. Car payments, rent, student loans, saving up to buy a house, all of that counter-balances the excitement of earning real money for the first time...

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August 30, 2018

Is It Safe to Bank on Wi-Fi?


Public Wi-Fi
Wi-Fi makes it easy to access information and do business online — whether you’re around the house, around town, or anywhere around the world. But just because it’s easy doesn’t mean it’s a great idea...

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August 15, 2018

How to Use Credit the Right Way


Your Credit
When you’re working to build or rebuild your credit history, how you use credit is everything. It’s important that you use credit the right way to build and maintain a good credit score...

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August 1, 2018

The Most Important Rule of Investing


Identity Theft
There's one golden rule that you should always keep in mind and observe when you're investing: Never invest money that you can't afford to lose. Investing is not saving. There's a significant difference between saving and investing...

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July 19, 2018

Planning for Retirement: An Introduction


Identity Theft
Even if you truly love your work, the day will come when it’s time to punch out for the last time and start your retirement. And when that day comes, you’ll want to have a robust financial plan in place...

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July 3, 2018

How to Protect Yourself From Identity Theft


Identity Theft
A financial plan gives you a road map for handling your money in a way that cuts stress and builds security. It’s crucial for meeting goals, such as buying a house or creating a nest egg that will last long after you’ve collected your final paycheck...

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June 18, 2018

How To Make a Financial Plan


Financial Plan
A financial plan gives you a road map for handling your money in a way that cuts stress and builds security. It’s crucial for meeting goals, such as buying a house or creating a nest egg that will last long after you’ve collected your final paycheck...

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June 5, 2018

Should You Rent or Buy a Home?


Buy or Rent?
Homeownership was once the cornerstone of the American Dream, but times are changing. More U.S. households are renting today than at any point in the last 50 years, according to a Pew Research Center analysis. For many people, the comforts of home include a well-funded bank account...

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May 22, 2018

The Huge Expense of Cultural Norms


The Cost of Cultural Norms
Having a big wedding. Going out to the club with friends. Exchanging gifts at Christmas with extended family. Going out for dinner. Driving a shiny new car. Living in a bigger house than necessary. Going out for drinks. Wearing makeup and jewelry...

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May 8, 2018

The Five Enemies of Your Financial Success


Enemies of Financial Success
The path to financial success is actually surprisingly simple.Spend less than you earn. Do something sensible with the difference.That’s it. If you do that each month, each year, each decade, you’ll have quite a lot of financial success. Debt will melt away...

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April 9, 2018

National Credit Union Youth Month: The Science of Saving


The Science of Saving!
This April, we are celebrating National Credit Union Youth Month and we encourage you to bring your children into any of our branches to learn more about the Science of Saving. Saving your money isn’t always easy, especially when you don’t have a lot to spare...

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March 27, 2018

What to Do if Your Aging Parents Are Going Broke


Family Money Issues

It’s a money leak that no one’s talking about: Nearly one in four Americans helps support a parent financially, according to a Care.com survey. But most families don’t discuss the issue — or the dollars involved — until a health or other crisis arises, says Jody Gastfriend, vice president of senior care at Care.com.

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March 15, 2018

This Simple Rule Tells You Where to Put Your Retirement Money


What's Your Plan for Retirement

IRAs. Roth IRAs. 401(k)s. SEP IRAs.

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February 28, 2018

The Disasters That Can Ruin Your Finances (and How to Avoid Them)


Avoiding Financial Disasters

To protect against floods, some people build houses on stilts or pilings. For tornadoes, there are storm cellars. And in the event of a fire, most buildings have (mandatory) smoke detectors and fire extinguishers. There’s no doubt the idea of a disaster can be terrifying, but in many cases they can be avoided—or at least insured against—with some smart planning...

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February 13, 2018

Charity of the Month: Abode Services


Helping Adobe Help the Homeless

“Abode Services is one of the largest and most effective nonprofits fighting to end homelessness in the Bay Area” says Abode Services Community Landlord Retention Coordinator Audrey Kwon.

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February 1, 2018

How to Open a Credit Union Account


How to open a credit union

Credit unions are a great place to keep your money and get loans. They’re usually a safe bet for finding free checking, and rates on savings accounts and loans are competitive. What’s more, these institutions are typically local, so they keep money (and their attention) in the same community you live in...

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January 17, 2018

Parent Trap: Supporting an Adult Child Will Cost Both of You


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You can’t blame parents for wanting to help their adult children. But when they fork over cash for their kids’ daily living expenses, parents may jeopardize their children’s long-term financial success — and put their own retirement at risk..

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January 8, 2018

5 Homeownership Changes Coming Under New Tax Law


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Will the new tax law save you money or cost you money? The answer depends on a complex array of factors that touch on just about every aspect of your financial life. This article is about a subset of your finances: How the tax law will affect homeownership and mortgages...

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September 11, 2017

Charity of the Month Thomas Russell Middle School


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September 8, 2017

Equifax Data Breach What Can Consumers Do


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Equifax has reported that a giant cybersecurity breach compromised the personal information of as many as 143 million Americans — that’s almost half the country...

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August 17, 2017

Millennials Fuel Mortgage Growth


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Did you know that economic trends in residential real estate suggest opportunities ahead in mortgage lending? In 2017, there will be more qualified borrowers, more buyers looking for a home, more new homes, and more refinancing for home improvement...

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