Most people know about the various credit reporting agencies and their associated reports. Many people even check their reports annually, which is a very wise thing to do. Nonetheless, many, if not most people, do not fully understand what the credit report tells them or what the credit score means. Worse yet, there are many who are outright misinformed on the nature of credit scores and what they mean.

One myth that needs to be cleared up right away is the notion of there being only one credit score. While there are credit scoring agencies that specialize in providing a consolidated score, that score is actually a compilation of information from the major credit reporting agencies: TransUnion, Experian, and Equifax. So, the next time you hear about a FICO score, keep in mind that that particular score is actually a summary of your credit information, not a comprehensive report on your credit worthiness. Still, there is nothing standing in the way of individual creditors using a FICO score as their sole criterion for making a credit granting decision.

Another popular myth you will hear in connection with your credit score is that it will decrease every time you check it. The real fact of the matter is that your credit score will not budge up or down if you, personally, check your credit reports. If you are, however, applying for lots of credit and your reports are being accessed on a continual basis because of this, then your score will change up or down depending on the outcome of those credit decisions.

Another piece of misinformation you will often hear associated with FICO scores have to do with how the score is derived. Many believe that income, age, and gender are major factors in figuring the score. In actuality, these factors have nothing to do with your credit score, but may be “risk” factors included in making credit decisions by companies outside of the credit reporting agencies.

Another false assumption about FICO scores is that the more money (cash) you have, the better your credit score will be. In fact, this may work against you in determining your credit score because creditors like to know that you have some need of their services on a revolving basis, rather than paying off the balance each month. The real determining factors in attaining a high credit score is to have a consistent history of making credit payments on time and keeping your overall credit utilization below 75%.

High credit scores are a sort of two-edged sword. While having one will almost guarantee that you can get all the credit you will need, it will also guarantee that you can get more credit than you actually need. Without a high degree of discipline, this credit availability can get you into a lot of trouble. Bottom line is, let your credit score reflect your financial responsibility, not your ability to obtain credit.