Thank you to all who contributed to this post and for having some fun with the comments. Below you will find the answers to the quiz. What I want and hope is that you will consider your credit and the value it has on your finances. I will continue to post on this topic in the future. In the mean time here is the greatest link to the most informative site I know on this topic. Go there and use it! It is a great resource! WWW.CREDITFAIRY.ORG Please give me some feed back on this resource. Do you have one we should know about?
1. It is impossible to change what’s in your credit report.
Correct! Inaccuracies, errors, out of date information canbe fixed with the credit bureaus. Accurate negative information (late payments, delinquencies, etc.) less than seven years old cannot be magically “erased” from your report, but you can begin to rebuild your credit by making positive financial choices going forward.
2. You have to make a lot of money to have a good credit score.
Correct! Your income is not included as part of your credit score or credit bureau report.
3. Paying cash for every purchase hurts your credit.
Correct! If you do not have any established sources of credit—credit cards, loans, etc.—lenders will actually consider you a credit risk. Paying your bills on time, using varied sources of credit and building a long credit history can bolster your credit score. Consider taking out a small loan and paying it off quickly or opening a new credit card and paying your charges off each month to help boost your score.
4. You have multiple credit scores.
Correct! You actually have at least four credit scores! Each of the three credit bureaus—Experian, Equifax and TransUnion—calculates your credit score based on their own information and data, in addition to calculating your FICO score based on their own information as well.
5. It takes 7 years to fix a poor credit score.
Correct! Negative credit items like late payments, defaults or delinquencies do remain on your credit report for seven years on average. However, you can begin to rebuild your credit score almost immediately by adding positive items (like on-time payments) to your credit history, thereby diluting the effect of past negative items.
6. Keeping old credit card accounts open can improve your credit score.
Correct! Length of credit history accounts for at least 15 percent of your overall credit score, so if you have a number of credit cards and decide you want to close one, selecting the card with the longest history is not the best choice. Payment history accounts for up to 35 percent of your score, so make sure you keep the cards you’ve had the longest, and pay them on time every month. The longer you’ve had a card with a good payment history, the better!
7. When you get married, your credit score is merged with your spouse’s.
Correct! Your credit history is unique to you…forever. However, if you apply for joint credit (car loan, home mortgage, etc.) with your spouse, both credit histories will be reviewed. If one of you has a negative credit history, it can affect whether or not you will be approved for the loan and its terms.
8. Checking your credit report can hurt or lower it.
Correct! You have the right to check your credit report anytime; this is called an “administrative inquiry” and it does not affect your credit score. However, too many inquiries made by potential lenders over a twelve month period canlower your score, so be careful about opening too many cards or applying for too many loans in one year.
9. Credit scores and credit reports are two different things.
Correct! Your credit report is a comprehensive listing of all your current and past credit cards, loans, and other personal financial data. Your credit scoreis a number calculated from the data in your credit report and other information, like checking accounts.
10. Bankruptcy is a “fresh start” for troubled credit.
Correct! Bankruptcies are reflected on your credit report…so while you won’t owe any outstanding debts anymore once you have filed for bankruptcy, the bankruptcy itself will still have a negative impact on your overall credit score.