Credit Facts & Fiction


The Credit Bureaus all share the same information

False! Each credit bureau is an independent company or competitor. The information they receive is from a source (example: creditor/lender or collection agency) reporting to them such information. In most cases your credit files/reports will be different in some way, this is because 1 source may not report your account to all the credit bureaus, whether it's a positive or negative account. There are no laws which mandate all creditors, collection agencies, and so on, to report all accounts to all credit bureaus. One account (positive or negative) could be reported to 1 bureau, all of them or none of them.


You can't really get negative accounts off your credit report

False! The fact of the matter is you can dispute incorrect information and have it removed, only correct information can be posted in your credit report(s). However, despite what creditors, collection agencies and even the credit bureaus may say, the source reporting the info has the absolute right to report, delete and/or change information in your credit report under 2 scenarios: 1> The information being reported must be accurate. 2> It's agreed upon to be changed and/or deleted from your credit report. One example of this, if you were to offer a collection agency a pay for delete deal and they accepted, the collection agency would delete the negative information even though it was indeed an accurate negative account in your credit file. Accurate negative information remains in your credit file for 7 years from the time it’s reported and 10 years (in most cases) for bankruptcy. Even negative information about a bill you fell behind on, (example: credit card payment) but you now are current with, will remain in your credit report for 7 years. You could try working an agreement out with your lender to delete this negative info as well, though there are no guarantees they would agree or comply. Read our Negative Info page for more details!



It's legal for credit repair companies to charge you up front for their services

False! Federal law mandates that credit repair companies cannot collect up front payments for their credit repair services. Many credit repair companies get around this law by charging “set-up” fees for your case or file. This is technically a legal loophole. Federal law also mandates all credit repair companies to the following:

Clearly explain your legal rights
A detailed written contract for you to sign/agree to
Give you three days to cancel your agreement/contract - NOTE: This particular mandate only applies to for-profit credit repair companies. This excludes: nonprofit organizations, banks/lenders and credit unions.
Also note: Be leery or skeptical of most “credit repair” companies. Far to many of them is scam or scheme one way or the other. However, not all are, so be careful in choosing one if that's the route you decide to take.



Create a second credit file in order to start with a clean slate

False! There has been discussions before on this topic and even some "credit repair" companies offering to create a different tax identification or social security number for you. The thought behind it, they could give you a clean credit file to start over and begin building a positive credit history under your new file. However, if you find a company offering this – Beware! This practice is called “File Segregation.” This is illegal and often doesn't work at all or at best, not for long. So as tempting as it may be, or in theory, a good idea to easily fix your credit – that's not the way to do it. You should avoid any company offering such a service.



There is no benefit in adding a statement in your credit file

False! Despite what the credit bureaus may say, adding a statement in your credit file for negative accounts, for example: “consumer disputes account” can have a positive impact on your score. Typically the credit bureaus will remove this comment once some time has elapsed (usually 3 months or so), once they do, your credit score may be affected negatively. However, you can simply re-post the same or similar comment and the results will usually be a small positive impact on your score.


Credit reports and/or scores are biased in some aspects

False! Credit reports are intended to provide personal information about you, as well as account information (current & past accounts). Scores are factored simply based on account information - nothing personal. Below is a breakdown of what is in your reports and what is & isn't factored in your score:

Information within your credit report:

Identity Information (personal identifiable info) - Doesn't factor in your score
This includes: your name (possibly even nick-names), address (current and old addresses), date of birth, social security number, and employment information (current and past employers). This type of information comes from information you provide on applications when you apply for credit. The lender or creditor then posts that information into your credit file. In any case, personal identifiable info does not factor in anyway on your score.


Trade Lines (credit accounts – usually positive accounts) - Does factor in your score
Creditors/lenders can report each account you have, as well as post your payments (paid on time, late, missed payments, etc...). This includes all accounts (credit card(s), auto loan, personal loans, mortgage, etc). Creditors may also report the date your account was opened or the date it was closed; they may report the loan amount, balance or credit limits. It's important to note, creditors/lenders have the right to report this information or not report it at all, they may report this info to some reporting agencies but not all of them. The only thing they have to do (if they report), is report the information accurately, but they do not have to report anything at all.


Credit Inquiries (hard & soft pulls on your credit file) - Can factor in your score
Every time you apply for a loan, you give your consent to the lender to pull your credit report, when they do this, it's an inquiry. All credit inquiries remain in your credit file for 2 years from the date the lender did the inquiry. There are different types of inquiries; one type is “voluntary” also known as “hard pulls” - this is when you voluntarily give your consent to a creditor to pull your credit report for the purpose of obtaining credit. The other type is “involuntary” or "promotional" inquiries - this is when you did not give consent to a full review of your credit report. Instead, a lender will do a “soft pull” on your credit report for the purpose of sending you “pre-approvals” in the mail. Lastly, "consumer initiated inquiries" - this is when you pull your own credit report soley to review the content within it. When you pull your own credit report, you will see a list of both the “hard pulls” and “soft pulls.” Only hard pulls have an affect on your score and having multiple “hard pulls” can have a large negative impact on your score. Hard pulls will generally have a small negative impact but only affects your score for 1 year. Soft pulls (no matter how many) will not have a negative impact on your score. In some circumstance, having multiple hard pulls in a relatively short period of time will have the same affect as having only 1 hard pull (small negative impact). This is usually the case when someone rate shops for a large purchase, for example, a mortgage.


Public Records and Collection Accounts (negative accounts) - Does factor in your score
Negative information or negative accounts includes: collection accounts, law suits, wage garnishments/attachments, liens against property, bankruptcies, judgments, and foreclosures. Some of this information is given to the credit reporting agencies by the negative account holder (collection agencies) and some of it is obtained by the credit reporting agencies collecting these public records through state, county and federal courts. Negative accounts usually remain in your credit file for 7 years, but depending on the type of account, it could remain in your credit file beyond 7 years, for example, a bankruptcy could remain in your file for up to 10 years.


Information not in your credit report and/or score: As far as what's not used when calculating your score - this can be broken down rather easily: Anything that is not predictive of future performance/repayment is not factored in your score.

Both your score and credit report do not use or hold certain information. This includes things like your race/color, religion, or sexual orientation. Federal law(s) prohibits this, plus, public assistance information, or if you exercised any consumer rights under the Consumer Credit Protection Act. Any information that could be considered as something that a lender could be biased on (one way or the other) is not listed. This insures when a lender reviews your credit file and checks your score, only your credit performance is taken into consideration and nothing further (although things like employment history and salary may be used in determining approvals and/or terms). Your score is unbiased on all social issues and only considers your past credit performances to predict a likely future performance. That determination is based on information regarding your credit accounts (both positive and negative accounts) as well as hard pull inquiries. There are multiple things taken into account for each account, (age of account, utilization, payment history, balance and much more), when factoring your score. Below are the factors given by Fair Isaac Corporation (FICO) in coming up with your score, although the exact formula used is a well kept trade secret:
  • 1. Payment history = 35% of your score
  • 2. Amounts owed = 30% of your score
  • 3. Length of credit history = 15% of your score
  • 4. New credit = 10% of your score
  • 5. Types of credit = 10% of your score
For more info about your credit score and how it's configured, read our Credit FAQs page!