How much do you know about your credit score? Test your knowledge by answering the following true or false questions.
A high credit score means you will always be approved for a line of credit, while a low score means you will be turned down. True or False?
False. Your credit score is rarely the only determining factor of whether or not you are approved or denied for credit. Lenders and creditors take several key points into account when deciding whether or not to extend credit to you, only one of which is your credit score. Your payment history, total debt, and employment history are also taken into consideration. A consumer with a high credit score that has an sporadic job history or high debt load can be denied for credit. Likewise, a consumer with a low credit score that has no credit history may very well be approved.
Credit scores do not take into account factors such as gender, race, marital status, or nationality. True or False?
True. Under the Equal Credit Opportunity Act, lenders are not permitted to use this kind of information in determining your credit risk. Credit scoring only uses information relevant to credit to calculate your credit score. The types of factors listed above are not used to determine your credit score.
Lenders are not obligated to reveal why you were turned down for credit. True or False?
False. By law, a creditor must inform you, in writing, of the reason or reasons that you were turned down for credit within 30 days. Not only that, you are entitled to a free copy of the credit report that was used to asses your credit.
Closing old credit accounts will undoubtedly raise your credit score. True or False?
False. Closing out your old credit accounts is not a sure fire way to improve your credit score. In fact, it could actually backfire on you and lower your score, especially if the account still has a balance. The history attached with an account does not disappear just because you close it.
Inaccurate information can be taken off of your credit report. True or False?
True. You are permitted to dispute inaccurate information by notifying the credit bureau reporting the information. Once the credit bureau receives this notification, they are required to investigate and give you a response within 30 days. After that time, the credit reporting agency will either remove the information from your credit report, provided it was truly incorrect, or inform you why it will not be removed.
Educating yourself about credit scores is highly recommended and will ensure that you are doing what you can to improve your own credit rating.
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