5 on Your Side

What REALLY Impacts Your Credit Score?

Posted May 5, 2010 2:26 p.m. EDT

Many people are being battered by the economy and worried about how it might impact their credit score. Having a low score can have serious consequences. It can affect everything from your borrowing power to your chances of landing a new job: when you apply for a loan-- your rate and approval depends on it. It can impact your insurance rates. And many companies look to credit scores to help them decide who to hire! So you've got to work to improve and protect it! Tonight at 5, we look into a credit score question many viewers have asked about: If you close credit card accounts that you don’t use or need, will that hurt your credit score? The answer is -- as you’ll see in tonight’s report-- IT DEPENDS. We’ll explain HOW to figure it out.

In my research I found an interesting article on credit score “facts and fictions” by Ann-Marie Murphy of the financial matters website Quizzle.com. Some of the highlights:
1) The more money you make, the better your credit score! FICTION! The fact is, income has nothing to do with your credit score-- it’s not reported to credit bureaus nor listed on your credit report.
2)Your management of your checking, savings and investment accounts impacts your credit score. FICTION! Again, the fact is-- like income-- your checking, saving and investment account activity is not reported to credit bureaus.
3)Pulling your own credit report will lower your credit score: FICTION! Pulling your own report is considered a “soft inquiry” and does not affect your score. HOWEVER, when a creditor or lender pulls it for the purpose of extending credit or a loan to you-- that’s considered a “hard inquiry” and may negatively affect your score.
4) Operating on a “cash-only” bases helps your credit score: FICTION! If you don’t have or use credit-- you don’t have a credit history. Scores are based on the responsible use of credit over time!
5) Credit bureaus don’t make mistakes. FICTION! Nearly 8 in 10 reports have errors, some of them serious.

For more interesting Credit Score fact and fictions-- visit:

About this Blog:

In addition to the stories you see on TV, Monica is always looking for ways to help consumers find deals and avoid fraud. She'll blog about what you need to know here.