Availing of credit can both have its benefits as well as pitfalls. It takes an individual with a good knowledge of credit to take advantage of its benefits and be aware also of the traps. One way to do this is to know a bit more about what are the facts and the myths behind credit and all of their different types. Here are some of the myths that you should know about.

Myth 1: You only have one credit score.

There are three credit reporting agencies in the US namely, Equifax, Experian and Trans-Union. Each one operates independently and do not share their data with one another. In a way, an individual may get three different credit scores from these three credit reporting agencies. But generally, the figures are not far from each other. If so, there might be certain errors made on one credit score that may be attributed to the different data gathering of the credit bureaus.

Myth 2: Closing unused credit accounts will improve credit score.

This is not necessarily the case. Closing unused credit accounts may even have an impact on your credit score in a negative way. Credit scores are usually computed based on the amount of credit being used to the corresponding credit that is available. By closing the unused credit account you have, the proportion may be affected and might make you look like a higher credit risk in the eyes of the lenders.

Myth 3: Settling accounts can banish red marks from the credit report.

Unfortunately, every bad credit mistake made is usually reflected in the credit report and may stay there for a long time. They usually can stay for as long as seven years on your credit report even though they are already settled and accounted for. The only way is to avoid committing the mistakes in order not to get red marks on your report.