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Orange County Credit Union provides a broad range of banking products and services like checking, savings, loans, and investments for every season of life. Through our blog, our aim is to equip readers with helpful advice that will enable them to reach financial goals.

6 Myths About Credit Scores


Welcome to the Orange County's Credit Union blog - Simple Banking.  It’s been said, that people who bank at credit unions feel financially empowered. Whether it’s one-on-one conversations or free financial educational workshops, at the Credit Union, we’re with you all the way.

We put people first. We’re here to listen. To answer your questions. To provide you with the information you need and to help you make informed decisions. We won’t try to sell you something you don’t need. 

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6 Myths About Credit Scores

Sandra Diaz

You probably know that a higher score gets you a lower loan rate which saves you money. But, what exactly is a credit score? It’s a number that helps predict how likely you are to repay a loan and make payments on time. The number is calculated by using information in your credit report. In general, it’s based on five factors (listed in order of importance):

  • Payment history
  • Percentage of credit being used
  • Length of credit history
  • New credit opened/inquires
  • Types of credit (i.e. credit cards, auto loans, mortgage, etc.)

Learn the facts about some common credit score myths.

Myth: I only have one credit score.

Fact:  There’s no single number. There are several scoring models available to lenders and creditors. The most widely used are FICO scores. However, models including FICO scores can be customized for a specific industry or even a lender. Each lender can create its own credit-rating scale to determine an excellent, good, or fair score, etc. So, if you want to know how your score rates, you’ll need to understand the scale. Also, each credit bureau (Experian, TransUnion, and Equifax) keeps its own credit file about you, so your score may be different at each bureau.

Myth: I’ll lower my score if I check it.

Fact: No! It’s OKAY and you should be checking your credit report. You’re entitled to a free credit report every 12 months from each credit bureau. You’re entitled, by law, to obtain one free credit report per year.

If you want your credit score, you may need to pay for it. Beware of sites advertising “free” credit scores – some are just an estimate and others are free if you sign up for a trial credit-monitoring subscription. Monitoring your credit report for errors – fraudulent accounts, wrong balances, and incorrectly listed late payments – is important. Remember, the information from the credit report is used to calculate your credit score. If you spot an error, dispute the information with the credit bureau.

Myth: Only lenders look at credit scores.

Fact: Businesses – insurance, utility, and mobile phone providers – are using credit scores to help them decide whether you’ll get a policy or service and on what terms. Potential employers and landlords can also review your credit score.


Myth: I’ll never get a loan with my poor credit.

Fact: Your credit score is an important factor when a lender is making a decision but it’s not the only factor. Lenders also consider your employment history, income, total debt, amount of a down payment, and total savings. Some lenders will also take into account if you’ve paid other bills on time, personal appeals, and references. And at the Credit Union, we’ll look at your total relationship with us. How long have you banked with us? Are you in good standing?

If you’re denied for a loan or given less than the most favorable terms (for example, interest rate or loan amount), you have the right to know why. To assist you in understanding why, a Risk Based Pricing Notice will be provided to you. You also have the right to ask the lender to explain what credit score they used along with the corresponding scoring range and other factors that impacted their decision. 

Myth: It hurts my score to have multiple credit cards.  

Fact: According to FICO, “someone with no credit cards tends to be a higher risk than someone who has managed credit cards responsibly.” Having a credit card helps you build your credit history. You’ll also boost your score when you have a history of making more than the minimum payment due on time. Do NOT max out your credit cards – this will dramatically impact your score. Try to keep the balance well below the limit. A good guideline is to keep your balance below 30% of your available credit.

Myth: Closing my account makes it go away.

Fact: Sorry! It will still appear on your credit report and its history will affect your score. Also, when you close accounts you’ll be altering your length of credit history. The age of your longest and newest account as well as the average of all accounts factor into your score. As a rule of thumb, it’s best to keep your oldest credit card and keep it active.