A credit score is that mysterious number that determines what you’ll pay for a car loan, mortgage and sometimes if you get hired. Most credit scores range from a low of 300 to a perfect 850. The higher the score the better rate you’ll get from a lender.

Credit scores seem to be a mystery to most. In a recent survey by Visa consumers were asked what factors negatively affect a credit score, and many were wrong. For example:

  • Where you live can ding your credit score.
  • Your job, your ethnicity or even your age could affect the score.
  • Credit counseling or taking a debt management class will lower your score.

Credit counseling use to be reported in a way that had a negative impact, but that’s not the case anymore. Taking a debt management class has never affected your credit.

Short sales, bankruptcies, foreclosures and late payments will generally fall off your credit history after seven years. And the older a negative item is, the less it will impact your score. A 5-year-old debt collection will be less damaging than one that’s 5 months old.

There are three credit reporting bureaus: Equifax, Experian and Trans Union. By law, every one is entitled to a free, annual credit report from each of the bureaus. To request your copy go to AnnualCreditReport.com or call 877-322-8228.

Doing an annual check is a good way to spot any errors that need to be corrected and to get an idea of how your credit looks to lenders. The Visa survey found that 42% of Americans don’t regularly check their score.

Read the article by Claudia Buck here.