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How much do you know about the crazy world of credit reports? Take our quiz.

Everyone knows you should try to keep your credit record clean. A good credit score could mean the difference between getting the house of your dreams or continuing to rent that trailer in your parents’ driveway.

But there are a lot of myths surrounding credit reports and credit scores, and misunderstandings can cause a lot of grief. We’re not suggesting that there’s much logic in the way credit scores are calculated, but if you know how to play the game, you’ll get better rates as a result.

See how you do on the credit questions below. Then we’ll give you the right answers and some of the reasoning behind it!

True or False?

1.    If you pay off a delinquent credit card, the information is removed.                                       
2.    All creditors use the same credit score.                                                                     
3.    No credit is worse than bad credit.                                                                      

4.    Bad credit could hurt your job chances.                                                                     

5.    Checking your credit will hurt your score.                                                                        

6.    If you have a lot of credit cards, you should consolidate them.                                                   

7.    If you have an old unpaid collection, pay it and your score will go up.                                             

8.    You should keep credit card balances below 50% of your limit.                                                               

9.    A bankruptcy will destroy your credit forever.                                                                        

10.  If my spouse has good credit, mine doesn’t matter.                                                                         

11. You can take a few simple steps to improve your score.                                                                            

12. Your friendly mortgage professional can give me credit guidance.                                                          



1.    FALSE. Negative information will remain on your report for up to seven years. Some bankruptcies will be there for 10 years. If you pay off a delinquent credit card, the report will show “paid” but it will still reflect that previous payments were late.

2.    FALSE.  There are many different credit scoring products in use today, each with a different range. If you got an 800 score when you applied for auto financing, don’t assume it will be 800 on your mortgage credit report. It’s a different formula.

3.    TRUE. If you’ve never paid anything on time, lenders have no idea if you will pay them in a timely manner. Bad credit at least tells them what they can expect from you in the future, and they will price the loan accordingly.

4.      TRUE. Employers have the right to consider credit scores as a factor in their hiring decisions. It’s up to the individual employer to decide whether or not to do so.

5.    FALSE. If you access your OWN report, no effect. But when you apply for a credit card or a car loan, it COULD hurt your score. Multiple “hard” inquiries like this will lower it even more. When a mortgage lender pulls your score, there is a small effect, but multiple mortgage inquiries don’t make it worse.

6.    FALSE.   The result of this strategy would be to put more debt on a single card, thus potentially “maxing out” that card. It’s best to keep your balances below 50% of your limit.

7.    FALSE. This will actually hurt your score! Why? Because the collection account is a “derogatory” account. The older the “derog”, the less effect it has on your score. Pay it off, and you’ve now had “recent activity” on a derogatory account. No, it doesn’t make sense, it just IS!

8.     TRUE. See #6 above. Maxing out your credit cards is a sign, according to the scoring models, that you’re getting into trouble and your chances of financial meltdown are increasing. Even if you’ve never missed a payment!     

9.    FALSE. Yes a BK will devastate your credit TEMPORARILY, and it be a drag on your score for a long time. But there are ways to re-establish credit, and the longer you follow good credit practices, the faster your score will improve.

10.FALSE. Lenders consider both spouses’ credit scores when you apply jointly for a loan, and they will base their decision on the LOWER of the two. If your spouse has lousy credit, you can try to leave him/her off the application, but only if your income alone is sufficient to qualify.                  

11. TRUE! Sometimes just paying down high credit card balances will do the trick. Most credit companies provide a “what if” scenario tool which allows us to predict how much your score will improve through specific actions.

12.TRUE! (Well, duh!) We look at credit reports all day long. Our ability to analyze credit and develop strategies to improve it often means the difference between success or failure. And higher credit scores often save our clients thousands of dollars in loan payments and up-front costs.


If you have more questions about credit, feel free to call us.




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