Credit Report Scores Can Be Confusing

It can get a bit confusing trying to discover your credit report scores. There are three agencies and not all of them have a ""score" on their reports. The ones that do tabulate what is on your report, assigning points. These add up to three digits that are supposed to tell lenders if you are a low risk or not. The higher your score, or the closest to 800, the better of a risk you are.

Every agency is independent of the other. They may have access to different information. Not everyone reports to all three agencies because you have to belong to one in order to report to it. Because of this, and the economy, there are misconceptions about these agencies, their reports and the scores. Here are a few myths dispelled.

A low credit score can cost you your job. Not valid. However, if your employer utilizes one of these agencies to check on the customers they do business with, they do have access to yours as well. Also, if you are seeking employment, a company can look at your credit history and factor that in their decision to hire you or not. They cannot do this without your permission.

How much you make affects your score. Wrong. It is the ratio between what you make and what you owe. If you make 500K and owe half of it, your score will be lower than your little brother who makes 60K and only owes 7K in debt.

When you get married, your credit report scores are combined into one. No, not true. In community property states, any loans or credit cards that are opened after you are married can effect both of your scores as can any loans in both of your names. Likewise, if you apply for credit together, each of your credit report scores are tabulated and considered. But what you bring in as far as credit score and history is your alone. If you get a divorce, what was jointly owed remains jointly owed. If one of you defaults on a payment that was jointly applied for, it will damage both your scores. Sorry.

If you cancel your credit card that will raise your score. Maybe, maybe not. If you are constantly transferring balances but not paying any of them down, it won't. Also part of your score is the amount of time you have had a credit card. Being in good standing for many years is a plus in your favor. Another thing is if you default on a card, or even pay it off then cancel it, it can be a bad reflection. Creditors look for long term relationships and trustworthiness.

It can get really confusing and complicated trying to figure out how your credit report scores are calculated from your credit history. Here are some easy tips-

a. Keep your old credit cards and keep their balances low. Try to not owe more than 1/3 the limit. If your limit is $1,000.00, keep the amount owed under $330.00

b. Do not have more than three cards at any one time. Do pay off some, especially if they are department store cards.

c. Always strive to pay on time and pay more than the minimum balance.

d. Try and work with your debtors to get things paid off if you are behind. It may be they will drop the bad mark form your report if it is resolved.

Of course, if you find any activity on your report you do not think is correct, contact your creditors immediately. That may also improve your credit report score.