by Chelsea Springli 
The internet is full of information about how to better your finances. But when you hear or read something about credit score or finance, how can you know if it’s true? How can you be sure that it’s true and not a credit myth? Today, I’ll try to try to cut through the clutter and give you 5 of the most common myths and truths. You might be surprised about what you learn.
Myth: Paying Off Debt Immediately Removes the Debt from Your Credit Report.
Your credit report reflects your credit history, which includes all of your accounts and payment statuses. Since delinquent payments, collection accounts, discharges, and bankruptcies stay on your credit report for 7-10 years, simply paying off a debt will not immediately remove it from your report.
However, paying off the debt will improve your credit score overall. It will also decrease your debt-to-income ratio, or the amount of money you owe each month compared to your income. When your DTI ratio is low, lenders see that you have wiggle room in you budget to afford another loan.
Myth: Every Time Your Credit Report is Pulled, Your Credit Score Decreases
When your credit report is “pulled” it’s classified as either a “hard” or “soft” inquiry. A hard inquiry occurs when you’ve taken an action like applying for credit and a lender pulls your credit report to review your credit history. This type of inquiry can affect your credit scores.
A soft inquiry occurs when you check your own credit or a lender sending you a “pre-approved” credit offer pulls your credit. This type of inquiry does not affect your credit score. This will help you when you research interest rates before applying for loan. Interest rates are often correlated with your credit score, but different lenders offer different options.
Myth: As Long as One Spouse has Good Credit, Low-Interest Loans will be Easy to Get
We have all had that thought before “oh, I’ll just use your credit and that will help us get a lower interest rate.” A spouse with poor credit can affect a couple’s ability to get credit or get a decent interest rate. Let’s say one spouse can’t qualify for credit on his or her own, and the couple wants to apply for a joint account or become co-signers on a mortgage. If one spouse has inadequate credit history, the couple might have to pay higher interest rates, additional fees or could be denied the loan.
The simplest way to boost a credit score is to make your minimum monthly payments on time every month. A large portion of your credit score is determined by your payment history. Even one mistake can set your credit score back several points.
Myth: The Credit Reports from Each of the Three Major Credit Bureaus are the Same
Not all your accounts/lenders will report to all three major credit reporting bureaus, which means, none of them will produce the exact same score as another. Also, accounts on your credit reports may not always update on the same day so each of the bureaus’ reporting to each other can vary at any given point in time. Different lenders may pull your credit from any or all of the bureaus. So it’s important to monitor your credit with all three bureaus in case you catch mistakes.
Myth: AI will Give You Accurate Credit and Finance Advice
As with many other subjects, when it comes to credit, you can’t always trust the information you come across. Artificial intelligence technology learns patterns from existing information to give you information. This can be helpful for creating a budget or calculating your interest over several months’ worth of loan payments. However, the caveat is that AI may find information from inaccurate sources.
When getting financial information from AI, ask for the source. That way, you can look at the original information and determine if it is legitimate and reliable. I recently used AI in this way to help me find an affordable car in my area. I asked for the sources so I could go straight to the dealership’s website and sure enough, some of the options weren’t local. On the other hand, AI helped me calculate how I can pay off my loan early too.
Truth: Alltru is Here to Help
If you’re ever unsure about how to use your credit or what is making your score change, please reach out to us. We’re here to help. Every day, we see people just like you who are seeking information seeking answers related to credit and finances so that they can better their lives. And that’s a fact.
