5 Credit Score Myths

Being debt-free will give you perfect credit:
There are many factors that are considered when calculating your credit score. The credit bureau considers your debt ratio. However, 35% of your score is based on your debt repayment history. If you pay off your debt in one lump sum, the credit bureau is not able to see a consistent history or repayment. This is very similar to someone who has never had a loan, their credit score is often low because the credit bureau is not able to assess how well that person will repay.

Having a good job will improve your credit score:
It is logical to think having a good job, especially one that pays well would improve your credit score. However, your job has no real correlation to your debt ratio or your payment history. There are thousands of people with fantastic well-paying jobs that are living beyond their means or struggle to manage their money and expenses.

Each person only has 1 credit score:
There are two main credit bureaus that lenders report to Equifax and TransUnion. Not all lenders will report to both bureaus and similarly, they rarely pull your credit from both bureaus. If you pull your own credit report from each of these bureaus and compare it, you are very likely to have two different scores.

Spouses share a credit score:
Both you and your spouse have your own credit score. Both scores are considered when applying for joint loans. However, if you are married and applying for a loan for your own car, you are not required to include your spouse or their credit bureau on your application.

Bankruptcy permanently ruins your credit score:
A bankruptcy only shows up on your credit bureau under “public records” for a minimum of 7 years, then it will fall off. That means it is no longer visible to anyone checking your credit bureau. It is highly suggested to start rebuilding your credit as soon as possible after a bankruptcy to avoid showing a credit gap on your credit bureau.

Car loans are a great way to build your credit after a bankruptcy as it helps you build your repayment history. Dealerships like Super Dave’s Auto Sales specializes in helping their clients rebuild their credit and ensure their clients find a reliable vehicle they can afford.

Need help finding your next vehicle? Take the first step by filling out our online application and a credit specialist will reach out to you as soon as possible.