Tagged as: Credit 101
Understanding your FICO® Score is key to building good credit. Here are five common myths about FICO® Scores explained.
- MYTH: Checking my FICO® Score will lower it.
FACT: Checking your own scores will never impact your scores. The only inquiries that count toward your FICO® Scores are the ones made when applying for new credit.
- MYTH: My FICO® Score isn't important.
FACT: When you apply for new credit, such as a new loan, your FICO® Scores may impact your ability to get the best rates, terms and promotions. In fact, high FICO® Scores could save you thousands of dollars.
- MYTH: I've recently seen my credit score on a free website and that's the same thing as a FICO® Score.
FACT: Not all credit scores are FICO® Scores. FICO® Scores – the most widely used credit scores – are used in over 90% of U.S. credit lending decisions. Make sure the score you're looking at is clearly marked "FICO® Score."
*Mercator Advisor Group Analyst Report 2017
- MYTH: Closing unused credit cards will increase my score.
FACT: One of the key categories in calculating FICO® Scores is credit utilization, or what proportion of your available credit you are using. The more of your available credit that you use, the higher your utilization rate. Closing cards can lower your overall available credit, resulting in a higher utilization percentage, which may negatively impact your FICO® Score.
- MYTH: A low FICO® Score will haunt me forever.
FACT: FICO® Scores are based on a snapshot of credit behavior. As your behavior changes, so will that snapshot. Healthy credit decisions such as paying bills as agreed can have an impact. Also, as time passes and negative items "age," their impact on your FICO® Score will be less over time.
Curious about your FICO® Score?
One of the many benefits of being a 1st United Credit Union member is that we provide an updated FICO® Score every quarter for the primary member. View your score on your quarter-end statement or by signing in to your account and selecting Statements & Notices from the main menu.
Time for a credit report check up?
Education is key to continuing to build good credit. Check out our educational content. We also invite you to make an appointment at any branch for a credit report check up.
© Fair Isaac Corporation.