Credit Scoring Facts You Should Know

In a previous post, we talked about credit myths.  In this article, we would like to outline a few credit scoring facts, truths, and good things to know.

1. Fact:  Inaccuracies Can Appear on your Credit Report. This is why many consumers choose to use a monitoring service.  Inaccuracies can come from credit fraud, identity theft, or mistaken identity.
2. Fact:  Potential Employers Can Ask Permission to Check your Credit Report. Additionally, employers are not usually prohibited from using this information when making hiring decisions.
3. Fact:  a Long-Term Line of Credit in your Name Can Improve your Credit Score. Yes, a long-term line of credit such as an auto loan or mortgage, if the payments are regularly made, is one of the best things a lender can see on your credit history.  It indicates you are financially responsible — a low risk consumer — and therefore a good candidate for lending to.  The exception here is if the payments on that line of credit are too high given your current income.
4. Fact:  The Most Recent Two Years of Credit History are Most Important. Yes, lenders look primarily at the previous couple of years of your credit history.  That said, very big negatives like bankruptcy can stay on your report for up to 10 years, and a lender will not be quick to overlook such a thing.