How these scores really work and can affect your finances
You likely know that your credit score is the litmus test lenders use to determine whether you’ll be a responsible borrower and deserve to be approved for loans and credit cards. But there’s a good chance you have one or more misconceptions about how credit scores are calculated and what can nick yours.
While the actual calculations used by the three major credit reporting bureaus (TransUnion, Equifax and Experian) are confidential and complex, the underlying concept behind them is fairly straightforward: if you have a history of paying your loan payments on time and in full, generally you’ll have a great credit score.
(MORE: 5 Ways Your Credit Score Can Get Nicked)
Credit scores may seem a bit complex and convoluted. However, it pays to understand how they work so you can make informed decisions about your finances. Here are six of the most common credit score myths to stop believing: