Credit scores and reports haven’t been around that long, in the grand scheme of things, anyway. The first standardized credit scoring model was FICO’s in the ’80s, and there wasn’t a ton of transparency about how they worked. Plus, new models are constantly being developed, causing confusion, misunderstanding and the birth of many myths.
Let’s squash these myths for good.
1. Your bank history is included in credit reports
Nope. Your banking history is not included in your credit reports. Bank accounts, like checking and savings, are not lines of credit, so they aren’t factored into your credit score and are not listed on reports.
In fact, bank account histories use entirely different bureaus. Credit scores use credit reporting bureaus, like Experian, Equifax and TransUnion. Banking history is reported by bureaus like ChexSystems or Early Warning Services, recording things like overdrafts, closed accounts or other suspicious activity. Banks can access this information to decide whether they’ll approve a bank account application.
Why is this a myth?
This myth likely arose because, logically, it makes sense to assume that your bank accounts are on credit reports — they seem to track everything else. But your credit score rates how well you manage and repay debt. Deposit accounts don’t involve borrowing, so they’re not factored into that score.
However, if you owe a ton of fees to a bank for things like overdrafts, the bank may send the unpaid debts to a collection agency, which could end up on your credit reports.
2. Getting married impacts your credit score
I had two friends tell me they weren’t going to get married because they didn’t want their credit scores to merge, since one of them has bad credit.
This myth needs to end.
Your marital status has no impact on your credit rating, and your and your spouse’s credit scores do not merge after you tie the knot. While a couple may merge many things after marriage, like auto loans or mortgages, credit scores and reports remain individual.
Why is this a myth?
This myth probably came about because it’s common for people to report bad credit ratings after a divorce, leading to the assumption that marital status impacts credit scores. However, why scores can change after a divorce is how their joint accounts and finances are handled during the separation.
Divorced couples are likely to close joint credit cards, sell their home, refinance loans or miss payments among the chaos of organizing finances and deciding who is taking over what. This shakeup of moving loans around and closing accounts is usually what causes the dip in credit scores after a divorce, not the separation itself.
3. Making multiple monthly payments increases your credit score
This one has some nuance to it, but making multiple payments on a credit card or loan doesn’t boost your credit score for the reason you may think.
Payment history makes up the lion’s share of your credit rating; this is true. However, fixed loans like mortgages and credit cards with minimum monthly payments only care about one monthly payment. Making extra payments each month doesn’t “trick” the scoring models into giving you a better payment history. Creditors typically report payment history to the bureaus once per month, anyhow.
Why is this a myth?
This misconception probably came about because people saw increases to their credit scores after making multiple monthly payments, but just misunderstood why they saw improvement.
More payments can impact your credit utilization ratio, which is under the category amounts owed — the second most important factor after payment history. Having a high credit utilization ratio, like owing $9,999 on a credit card with a $10,000 limit, can be an indicator of overextension, which is why it’s factored into your credit score. By paying down mortgages, loans and credit cards faster than scheduled, you can decrease how much you owe, which can result in a better credit score over time.
4. Checking your own credit score hurts it
In fact, it is your right to review your credit score and reports, thanks to the Fair Credit Reporting Act.
Viewing your own reports is considered a soft credit pull, which has absolutely no impact on your rating. Similarly, when you receive unsolicited preapproval letters from creditors, those are also soft pulls that didn’t affect your credit score or reports.
Why is this a myth?
This myth was likely perpetuated because hard credit pulls can affect your credit score. Hard pulls happen when you apply for new credit and can temporarily hurt your credit score for up to 12 months and remain for up to 24 months on your reports. New credit applications are tracked because someone who frequently applies for new credit could be a sign that they’re in financial trouble or are financially overextended.
5. Rent payments don’t impact credit scores
Again, there’s some nuance, so bear with me. That statement on its own is technically correct most of the time. On-time rent payments are not normally reported because renting isn’t a form of credit, and landlords are not legally required to report on-time payments to the credit bureaus.
However, the lessor could report missed or late payments to the bureaus or send the debts to collections, which can lower your credit score.
And there are ways to get on-time rent payments reported. Some lessors may offer to report payments through a third-party company (like Esusu Rent), or renters can sign up for a rent reporting service separately.
Why is this a myth?
It’s a myth because technically, it holds some truth. However, missed and late payments can be reported, so just because on-time payments aren’t sent, don’t think the late ones won’t be.
Bottom line
Knowing what actually impacts your credit score and what goes on your credit reports can help you improve your rating and avoid negative dings.
FICO, the most popular credit score company, offers a ton of educational resources you can read up on for free. Additionally, FICO isn’t the only credit scoring model — there’s also VantageScore. While not as widely used as FICO, VantageScore has its own credit scoring system (which probably doesn’t help the spread of credit rating myths).
Credit scores are complicated, but you can find out what impacts them and what doesn’t, thanks to a variety of resources straight from the credit bureaus and credit scoring models themselves.
