Your credit score is vitally important in applying for a mortgage or refinance; however, it is a mystery to many of us on how these scores are calculated.  The following list of credit score myths has been prepared by TransUnion and they should know.

Myth 1 – Your credit scores drops if you check your own credit.
Truth: Viewing our credit reports counts only as a “soft inquiry” and doesn’t change the score. “Hard inquiries” by a lender or creditors, though, can slightly lower your credit score.

Myth 2 – You should close old or inactive accounts to help your credit score.
Truth: Closing accounts may actually have the reverse effect of lowering your credit score because it can shorten the measured duration of your credit history.

Myth 3 – Paying off a negative record means it’s taken off your credit report.
Truth: Generally, negative records like collections or late payments will remain on your credit report for up to seven years.

Myth 4 – Cosigning doesn’t mean you’re responsible for the account.
Truth: If you open a joint account or cosign a loan, you will be held legally responsible for the account, meaning activity on the joint account is displayed on credit reports of both account holds.

Myth 5 – Making on-time rental, utility, and cell phone payments helps my credit score.
Truth: While outstanding rental, utility and cell phone debt that have gone to collections can negatively affect your score, generally, on-time payments are not regularly reported to the credit bureaus.

Myth 6 – Your credit score reflects changes or trends in your payment behavior.
Truth: Historically, credit scores have not incorporated trended credit information, meaning they are a moment-in-time glimpse at consumer risk.