By: Jeffrey Lapin

Many people are confused about their credit scores. In a previous post, Credit Scores: How Are They Calculated and Why Are They So Important, the basics of the importance of credit scores how they were calculated was discussed. The following are some of the most common misperceptions about credit scores:

My credit report should be the same for all three major credit bureaus.
This is false. The information on your credit report is supplied primarily by lenders, debt collection companies and court records. Lenders and collection companies may not report the information to all three collection bureaus. Furthermore, the entities may report credit information to credit bureaus at different times.

Each person has only one credit score.
This is false. While each of the three major credit bureaus, Equifax, Experian and TransUnion each use software developed by the Fair Isaac and Company (FICO), the information and analysis is different between these companies. In addition, each company may not have the same credit information, which would affect your score. In addition, other credit companies may calculate a credit score not based on FICO.

My credit scores do not change often.
This is false. Your credit score likely changes each month, although it may not be by much, as your score is based on the information contained within your credit report. Whenever new credit reporting information is received, your credit score likely changes.

There is a “perfect” credit score.
This is generally true. Each major credit bureau does have a “perfect” score, which is the highest score you could obtain using their formula.

A perfect credit score guarantees I will get a loan with a very low interest rate.
This is false. While lenders do use credit scores in determining whether to loan money and under what terms, they examine other information as well such as employment, the amount of the loan and collateral. A person with a perfect credit score but very little income or resources, may not get as favorable terms as someone with a lower credit score but a high paying job. Credit scores are just one item lenders use in making lending decisions.

It does not matter if I use my nickname, like “Jeff” rather than “Jeffrey”, when I apply for credit.
This may be false. The credit bureaus try and combine information when they receive credit information when a person is issued credit under a nickname or maiden name. They do this by looking at other information they receive, such as social security number or address, to combine credit information in these situations. However, this may not always work.

You can get your credit score for free, by law, once a year.
This is false. Under the Fair and Accurate Credit Transactions Act (FACTA), which was a 2003 amendment to the Fair Credit Reporting Act (FCRA), you are entitled to your credit report, not your credit score, once a year from the three major credit bureaus.

There are situations in which I am entitled to, by law, a free copy of my credit score.
This is true. Provisions within the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), passed in 2010 but which only went into effect on July 21, 2011, now requires disclosure of credit scores in certain instances. First, you are entitled to a free copy of your credit score when a lender uses “risk-based pricing,” which is setting less favorable credit terms, such as a higher interest rate or lower credit limit, to “higher risk” individuals, if your credit score is used to set these less favorable credit terms. Second, you are entitled to a copy of the credit score used when a lender takes an “Adverse Action.” The types of activities that constitute an “adverse action” include denying credit to an applicant or making unfavorable change in credit terms for a current borrower.

Credit scores are unfair to minorities.
This is false. Credit scores, issued by the 3 major credit bureaus, are derived using FICO software, which is based on mathematical models and formulas, based on the information contained within your credit report. In addition, according to FICO:

Independent research has been done to make sure that credit scoring is not unfair to minorities or people with little credit history. Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history. In other words, at a given score, non-minority and minority applicants are equally likely to pay as agreed. (Source:

However, a person’s credit score is only a factor a lender uses when deciding to lend money and under what terms. While the Equal Credit Opportunity Act (ECOA) prohibits lenders from considering information such as gender, race and nationality when lending money or issuing credit, lending decisions do take more consideration than a person’s credit score or credit report and gender, race and nationality still may be unlawfully considered.

When you get married you share a credit score with your spouse.
This is false. Each person retains their own credit score. However, your credit report and score may be affected by actions done jointly, such as opening a shared credit card account. If one spouse, who agreed to pay the credit card bill, fails to do so, this will result in a negative credit reporting and may affect your credit score.

Divorce prevents your ex-spouse’s actions from affecting your credit score.
This is generally true. However, this only holds true if all joint accounts opened during the marriage are closed immediately. As long as an ex-spouse name remains on an account or financial obligation, their actions may affect the other’s credit score.

Bankruptcy permanently ruins your credit score.
This is false. Bankruptcy does have a significant effect on your credit score. However, you can start building it back up after one year by making all payments on time. After seven to ten years, bankruptcy usually is no longer a factor in determining your credit score.

A high paying job improves your credit score.
This is false. Your credit score is based on your credit history, the credit you have outstanding and whether you make your payments on time. You could earn $5,000,000.00 a year but, if you do not pay your mortgage on time, your will have a negative credit history and a lower credit score. A high paying job can affect your credit score if you do not spend more than you make and you use your income to pay your debts on time.

Winning the lottery will improve your credit score.
This is false. Similar to having a high paying job, the amount of money you have does not affect your credit score; only your credit history and the amount of your outstanding credit.

People with no credit cards have the highest credit scores.
This is false. Statistics shows that the people with the highest credit scores do have credit cards. However, they limit their spending on the cards to about 10-15% of the total credit limit each month, which they pay off, in full, each month.

If you never incur a long term debt you will have a perfect credit score.
This is false. To demonstrate that you can manage debt and make payments on time, which creates your credit history, you need to incur some debt and pay it off. If you never incur any debt, you have no history to evaluate you as a risk or to establish a credit score.

Your credit score is effect based on the city or state in which you live.
This is false. Just as your job or the amount of money you have, where you live does not have any effect on your credit score.

Settling your debt for an amount less than what is actually owed will not affect your credit.
This is false. Settling your debt will hurt your credit score if the creditor reports it the credit bureau as a negotiated debt. Settlement, while lowering the amount you owe, does negatively affect your credit score as you demonstrate an inability to manage the debt within the original terms in which it was incurred.

Credit Bureaus do not have to do anything about incorrect information on a person’s credit report.
This is false. Under the FCRA a credit bureau is required to investigate any negative item contained within your report, which lowers your credit score, upon your request. If you are correct, they are required to delete or correct the information.

A person can sue a credit bureau for assigning a low credit score.
This is false. A person likely has a different credit score from each major credit bureau as they use different formulas and may have different information. The credit score is just their calculation as to the risk you pose in not paying back money. How that credit score is used differs depends on who requests it. You have no rights if you are given a lower credit score than you believe you should have. However, a credit bureau can be liable for a number of different items related to your credit report under the FCRA, FACTA and other federal and state laws. If a credit bureau violates the law with regard to your credit report, you can sue. Under the FCRA, you may be entitled to your actual damages or between $100.00 and $1,000.00, punitive damages and reasonable attorney’s fees and costs.


If you believe your rights have been violated under the Fair Credit Reporting Act (FCRA) or other law regarding your credit report, contact Lapin Law Offices for a free consultation. We represent most clients on a contingency fee basis, which means if we do not get money for you we do not receive a fee. You can contact us at 402-421-8033 (Lincoln, 888-525-8819 (Toll Free) or through our the Contact forms on our websites: or

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NOTE: Lapin Law Offices does not offer the following services regarding debt: financial planning; money management; debt consolidation; credit counseling; or bankruptcy representation.