As a small business owner, knowing how banks decide whether to give you a loan and at what rate is important. Your personal credit history is an important consideration and the more you know, the easier it will be for you to take the actions to improve your creditworthiness. A survey conducted by Credit Karma highlighted seven often misunderstood facts about credit:

  • Multiple Credit Scores: There is no one “official” credit score.  The three major credit bureaus are Equifax, Experian, and TransUnion, and each bureau developed its own proprietary credit score model.
  • Collections Impact: Paying off a collections account does not automatically remove it from a credit report. Collections accounts can remain on a credit report for up to seven years, paid or not. Resolving collections could still benefit credit health.
  • The Benefit of Open Accounts: Closing unused cards was not always in the best action to take. It’s usually best to keep all credit cards open, active and on-time. Closing an account could raise credit utilization rates and drop a credit score.
  • Self-Checking: Checking on your credit score and requesting a credit report does not affect the credit score. Self-checking is considered a soft inquiry (as opposed to a hard inquiry from a bank.
  • Income Exclusion: Annual income is not included in a credit score calculation.  Most lenders will request income information and consider debt-to-income ratios in lending decision making.
  • Zero Balance, No Problem:  You don’t have to carry a balance on your credit card from month-to-month to build your credit ratings. It is important to use a credit card, but you receive credit value even with a zero balance.
  • Credit Variety: Having a healthy variety of credit accounts (credit cards, mortgage, auto loans, etc.) can add to on-time payment history and help your credit.


John Privette holds a M.S. degree in business. His work experience includes international marketing and sales, offshore operations management and small business ownership. John is accredited as a NASBITE Certified Global Business Professional. If you have any questions about international trade, contact John via email at

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