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***** The Truth about Credit Scores *****
Though your credit plays a major role in nearly every major purchase you make, most people don't think about their credit until they need it. And a recent report issued by Congress found most consumers know their credit reports and credit scores are important, but they know less about what factors can affect them. Following are some common credit myths and some facts to set the record straight.

Credit Myth #1 : Checking your own credit can lower your credit score. This is probably one of the most common credit myths out there. When you or someone else accesses your credit file, it is referred to as an inquiry. Your own requests for your credit report, promotional inquiries by credit card companies, and "checkup" inquiries by your existing creditors do not affect your credit rating. An inquiry made by a lender in order to evaluate your loan or credit application may lower your credit rating, however.

Credit Myth #2: You have one credit score. This is another myth that can be confusing for consumers. There are many types of credit scores -- including those developed by the each of the three major credit reporting companies. These scores can vary, because sometimes the information in your credit history varies from one company to another. So it is wise to check your scores first before applying for a loan. The FICO® credit score developed by Fair Isaac Corporation is the credit score used most by lenders. It is unique to each individual and takes into account such factors as the length of your credit history, your debt-to-credit ratio and payment history.

Credit Myth #3: The higher your salary, the higher your score. Not true. In fact, your income and net worth are not reported to any credit reporting company. Your score is based largely upon the amount of debt you have and your payment history. The more of your debt you pay off, the likelier it is that you'll see a positive change in your score.

Credit Myth #4: Paying off debt will immediately increase your credit score. This is something many consumers have difficulty understanding. While paying down debt is likely to have a positive impact on your credit score, it won't change your score overnight. Creditors report their customers' payment information to credit reporting companies on a periodic basis, so it may take some time before payments you've made are reflected in your credit score.

Credit Myth #5: Credit card offers can hurt your score. While applying for or opening several credit cards in a short amount of time could have a negative impact on your credit score, the actual offers you receive in the mail have no effect on your score.