Part 5 - The Truth Of The Matter What Your Credit Rating Reveals About You

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By Mia Bolaris-Forget

Myth: Getting credit is based on my score
Truth: Lending organizations review more than just one aspect of your financial situation before making credit decisions. They look at and evaluate the amount of debt they feel you can reasonable handle based on income, employment history, and credit history. This, in combination with their specific underwriting policies may afford you credit despite a low score, or they may decide to decline your request even though your score was high.

Myth: A poor score is a lifelong stigma
Truth: While this “may” be the obvious conclusion…in reality, it is quite the opposite. Your score only reflects a particular point in time and is prone to change on a daily basis. In fact, your information is frequently upgraded with respect to your band and credit bureau files. Scores change gradually and, upon “redeeming” yourself, “past “problems’ lessen in impact. Taking the time to improve your score also means giving yourself the chance to qualify for more favorable interest loans.

Myth: Rating is “unjust” the minorities
Truth: Credit ratings account only for credit-related history and not personal factors such an age, ethnicity, religion, etc. In fact, NONE of this information is included and the Equal Credit Opportunity Act prohibits lenders from taking such statistics into account. According to independent research, scoring has proven to be accurate and fair to all applicants.

Myth: Credit scoring infringes on my privacy
Truth: Credit scoring simply provides lending organizations a general picture of your financial potential. In fact, it is merely an evaluation of information lenders already have access to and examine. Your score is just a numeric summary of that information.

Myth: My score will drop if I apply for new credit
Truth: If affected at all, it probably won’t be by much. Applying for several cards within a short period of time, multiple requests for your credit report information will appear on your report, and may equate with higher risk. Still, most credit scores are unlikely affected by multiple inquiries from auto or mortgage lenders, even within a short time span. Generally speaking, these are viewed as a single inquiry and will have little impact on your credit score.