Credit scores—can’t live without ‘em, can’t understand ‘em. Given how essential personal credit scores are to our financial mobility, a shocking number of credit-related misconceptions persist. Today, we’re demystifying your credit report to help you better understand the credit reporting industry and how to navigate it from a place of strength. Read on, and we think you’ll be surprised at least once. Myth: The Bureaus are Government-Run The major credit reporting agencies—TransUnion, Experian, Equifax—are independent companies that report on consumer credit. The Fair Credit Reporting Act (FCRA) governs how credit bureaus operate, but the government does not directly report on credit. Instead, the Federal Trade Commission (FTC) and the Office of the Comptroller of Currency (OCC) monitor credit agencies. Myth: All Credit Scores are the Same Are all credit scores FICO scores? If you thought so, you aren’t alone. Many people assume that credit scores are standardized and use the term “FICO score” as a generic catch-all for the scores given by each major credit reporting agency. While many lenders and credit reporting agencies use FICO, not all credit scores are FICO scores. It’s a little like the elementary school geometry lesson—“Every square is a rectangle, but not every rectangle is a square.” In this case, credit scores would be the rectangle and FICO scores would be the square. What’s is a FICO score? myFICO reports that " FICO Score is a three-digit number based on the information in your credit reports. It helps lenders determine how likely you are to repay a loan." FICO is a data analytics company, and only FICO-authorized retailers give you your FICO score. You can receive your FICO score through Experian and some Equifax reports. If your bank is enrolled in FICO Score Open Access, you may also have free access to your FICO score. Myth: Credit Bureaus are ‘On Your Side’ Credit bureaus make the bulk of their money by selling credit reports to lenders. It is their job to help a lender assess the risk of a borrower before awarding a loan, opening a new credit card, granting a lease, etc. To do so, credit reporting agencies track your current and past credit accounts, your payment history, a record of who has accessed your credit report, and any negative information. Think of it like this—in school, your permanent record was for teachers, school administrators, and colleges. Your yearbook was for you. A credit report is more like a permanent record than a yearbook, though it’s not permanent (more on that later). Myth: Credit Reports are Complete In theory, credit reports reflect your complete credit history. In practice, it’s common for them to miss information. Because credit reports are designed to help the lender asses risk, incomplete credit reports are more likely to skew negative. A lender would rather err on the side of caution, so they’re not as concerned about the erroneous absence of on-time payments on your credit report. Advocate for yourself by scanning your credit report to ensure it’s complete. If you find missing information, you can file a dispute or work with a credit repair agency (recommended) to have it corrected. Myth: Credit Reporting is Built for the Consumer As we mentioned above, credit reporting is built for the lender. Until the FCRA was passed in 1970, credit bureaus weren’t even legally required to provide consumers with access to their credit reports. Thanks to government oversight via the FCRA, consumers can now request a free copy of their credit report from each of the 3 major agencies every 12 months. If you spread those out, it gives you access to pull a free copy of your credit report every 4 months. Myth: Credit Bureaus are Infallible Many people assume credit agencies don’t make mistakes—or at least they did until the Equifax data breach of 2017 when the company announced that the data of 143 million US consumers had been breached. Following the breach, 8 states have passed new regulations, but Congress is still working toward changes on the national level. Until there is a larger structural change to increase protections for the sensitive data contained in credit reports, you can safeguard your information with credit monitoring. Myth: Credit Scores are Accurate According to a study from the FTC, 1 in 5 people has an error on their credit report. They found that for 5% of Americans, these errors were extreme enough that it could lead to higher payments on insurance and loans. Myth: Credit Reports Can’t Be Changed If you have an error on your credit report, you can file a dispute to have the inaccuracy removed. What about accurate derogatory marks? Credit mistakes can have long-lasting effects on your credit, but they’re not forever. Missed payments, collections accounts, foreclosures, and other credit mistakes stay on your record for 7 years. A Chapter 7 bankruptcy lasts a little longer, remaining a part of your credit history for 10 years. Myth: It’s Easy to Fix Inaccuracies As we covered, inaccuracies happen. When you discover an inaccuracy on your report, you can dispute it with the agency. We wish we could say it’s as easy as 1-2-click, but as we’ve discussed, credit reporting agencies aren’t built for the consumer. Disputing credit inaccuracies involves a small-to-medium mountain of paperwork and more financial jargon than any of us want to read in a lifetime. Instead, you can work with a credit repair agency. It will save you the headache and may be more efficient and effective. These companies specialize in correcting credit reports, so they know how to navigate the system. Myth: Business Credit is the Same as Personal Credit Did you know your business has its own credit score? Find out everything you need to know about business credit, including how it can affect funding decisions.