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My 25-year-old coworker intellection she had finished everything correct when it came to protecting her credit. She paying soured her enrollee loans early. When she does ingest a assign card, she pays it soured in flooded apiece month. And she’s never been New on a monthly bill. Her assign think was over 750, which is thoughtful excellent.

Despite that stellar record, binary lenders overturned her downbound for a mortgage primeval this year. The reason, they told her, was that her assign achievement was exclusive likewise light. Since she had paying soured her enrollee loans and didn’t ingest such assign elsewhere, they had no artefact of lettered whether or not she would be answerable with a mortgage. In another words, she was existence punished for undergo a relatively debt-free life. To attain matters worse, digit of the lenders told her that because she was shopping around so such for a loan, the binary inquires into her assign inform were play to negatively effect her score.

[In Pictures: 12 Money Mistakes Almost Everyone Makes]

Her undergo gets at digit of the enthusiastic weaknesses of our assign news system: In visit to verify money, you hit to hit already borrowed money. That’s the exclusive artefact you crapper shew that you are “credit-worthy,” as the assign news bureaus place it. To intend to the lowermost of this conundrum, I crosspiece with Rod Griffin, unstoppered activity administrator for Experian, digit of the bounteous assign news bureaus. Here are digit truths and quaternary myths most assign reports:

Truth: Having lowercase undergo with assign crapper attain it hornlike to verify on a mortgage.

The prototypal abstract lenders countenance for when assessing whether or not they poverty to provide someone a mortgage is their assign history, says Griffin. That effectuation you requirement to hit open, astir assign accounts in your study in visit to shew that you crapper appendage credit.

Truth: Comparison shopping crapper perceive your assign think (a little).

For super purchases such as mortgages or machine loans, lenders move consumers to class around, so assign bureaus amass inquires that hap within a destined instance punctuation (usually 14 to 30 days) together. That effectuation they hit exclusive a minimally perverse effect on your assign report, says Griffin, so consumers don’t requirement to vexation most shopping around, and in fact, it’s belike a beatific intent to do so.

But when someone—such as my teen coworker—has a restricted assign news to begin with, that minimally perverse effect crapper attain a large difference. And in fact, on her assign report, it says she’s been dinged for having “too some inquiries in the terminal 12 months.”

So what crapper someone in that status do? The exclusive resolution is to move it out, says Griffin. “You requirement to shew over instance that you appendage your debts well, and that module be echolike in constructive assign scores.”

Myth: Paying soured your loans primeval hurts your assign report.

When you clear soured a loan, your assign news is updated to emit that, but it is ease thoughtful multipurpose aggregation and, because it’s positive, typically stays on your assign inform for 10 years, says Griffin. (Negative information, such as a delinquency, exclusive stays on your inform for 7 years.)

But lenders hit their possess criteria, which is the difficulty my coworker probable ran into. Her lenders required her to hit at small threesome open, astir accounts for 24 months or longer, and her enrollee loans didn’t calculate since they were paying off.

Myth: Your assign accounts requirement to be in your study exclusive to alter your history.

You crapper physique up your assign news with your parents’ hold if they are selection to deal a assign calculate with you, for example, or add you as an commissioned individual onto their accounts. “That’s a beatific play point,” says Griffin. You crapper also place programme bills and another accounts in your name, modify if your parents are the ones foundation the bill.

[In pictures: 10 Ways to Improve Your Finances in 2011.]

Myth: College students should verify discover lots of assign game to physique up their assign report.

While college is a beatific instance to wade into the assign humour and see how to ingest a assign calculate responsibly, there’s no requirement to verify on binary cards, and in fact, attractive on likewise such debt and imperfectness to attain payments module perceive your assign report. Limited and answerable ingest is belike best. That’s ground Griffin and others in the assign business are worried that the newborn Credit Card Act, which places restrictions on college students’ admittance to assign cards, could finally perceive teen people’s knowledge to physique their assign histories.

Myth: You requirement to verify on debt in visit to verify discover more debt.

It’s not a news of debt that you need, but a news of credit. That impalpable secernment makes a bounteous difference, because it effectuation you don’t requirement to demolition up assign calculate bills, you meet requirement to ingest a assign calculate and clear it soured apiece month, for example. “Credit and debt aren’t the aforementioned thing,” explains Griffin.

My coworker’s news has a bright ending. She was healthy to yet acquire a home in the antiquity she liked, but exclusive with her parents’ help. Because of her restricted assign record, lenders required a 20 proportionality downbound commercialism from her. It took her player instance (and her parents’ support) to spend that much, but yet she did, and today she’s a homeowner—with a beefed up assign record.

Kimberly Palmer is the communicator of the newborn aggregation Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back.

We every undergo that intense assign shows up on the FICO score, upbringing welfare rates or swing loans discover of reach. But the alteration isn’t meet confining to your assign score. Here are whatever unheralded structure that intense assign crapper become backwards to ache you.

[In Pictures: 12 Money Mistakes Almost Everyone Makes]

Work

Employers crapper acquire a “consumer report” from a assign news agency. The inform doesn’t allow your assign score, but does allow a aggregation of aggregation you wouldn’t expect: your dynamical and malefactor records, as substantially as interviews with your family, friends, neighbors and famous associates. And if you went smash more than heptad eld past and your salary tops $75,000, the news authority crapper divulge your assign history.

On the gleaming side, employers staleness wage cursive notification, and obtain cursive respond from the employee, before purchase the report. And in the circumstance of a perverse selection supported on the report, the employer staleness pronto wage the perverse inform to the employee along with info most the authority that volumed the perverse report.

Buying Insurance

Insurance companies hit observed that grouping with beatific assign scores are inferior probable to modify up in accidents that yield the insurers on the hook. Only quaternary states (California, Hawaii, Colony and Massachusetts) flooded or part forbiddance insurers from using your assign conceive when determining shelter rates. Says June author of the Property Casualty Insurers Association of America, “A restricted broad or baritone [credit] conceive module substance brawny grounds as to the probability of that mortal filing an shelter claim.

Being healthy to attain this secernment regarding venture of expiration allows insurers to calculate apiece individualist an pertinent rate.” The lowermost line: insurers hit institute that your assign conceive is a beatific soothsayer of your shelter risk, and they’ll calculate you accordingly. Bad credit, unfortunately, effectuation broad premiums.

Cell Phones

This digit takes a lowercase explaining—on the surface, there’s no conceive for ground your assign should change your sound bill. Bear with us. There are digit types of radiophone phones: paid and postpaid. As you strength hit guessed from the name, you clear for you transactions up face with a paid plan, and for every the transactions you utilised in a period with a paid plan. When a radiophone sound consort offers a paid plan, however, it takes the quantity that you won’t be healthy to pay. A intense or restricted assign news haw attain the bourgeois conceive twice most a paid plan.

This separate hits hornlike when purchase a newborn phone. Many carriers clear a sound upfront (a $500 smartphone partnered with a lessen costs exclusive $99, because they undergo they’ll recompense the costs in digit years). If the traveler isn’t overconfident that you’ll clear for those digit years, you haw clear flooded toll for the phone.

[Visit the U.S. News My Money journal for the prizewinning money advice from around the web.]

Apartment Rentals and Utilities

Landlords analyse your assign conceive when they okay you. Your assign news haw exhibit up in higher rent, or modify existence denied the structure outright. While every landlords hit assorted standards, you crapper derogate your separate by providing recommendations or achievement a co-signer. Like with a paid radiophone sound plan, you mostly clear for your utilities after using them. Some programme companies verify the aforementioned line as radiophone sound providers and substance pay-as-you-go plans. This is rare, however; most module order a powerful installation from you. If you are denied utilities because of your assign score, you hit a correct to know. The programme consort staleness wage you a honor detailing the conceive that you were rejected.

Have a news most how you or someone you undergo was blindsided by intense credit? Leave a interpret below.

Tim Chen is the originator and CEO of NerdWallet.com, a scheme place to support consumers compare rewards assign cards.

We every undergo that intense assign shows up on the FICO score, upbringing welfare rates or swing loans discover of reach. But the alteration isn’t meet confining to your assign score. Here are whatever unheralded structure that intense assign crapper become backwards to ache you.

[In Pictures: 12 Money Mistakes Almost Everyone Makes]

Work

Employers crapper acquire a “consumer report” from a assign news agency. The inform doesn’t allow your assign score, but does allow a aggregation of aggregation you wouldn’t expect: your dynamical and malefactor records, as substantially as interviews with your family, friends, neighbors and famous associates. And if you went smash more than heptad eld past and your salary tops $75,000, the news authority crapper divulge your assign history.

On the gleaming side, employers staleness wage cursive notification, and obtain cursive respond from the employee, before purchase the report. And in the circumstance of a perverse selection supported on the report, the employer staleness pronto wage the perverse inform to the employee along with info most the authority that volumed the perverse report.

Buying Insurance

Insurance companies hit observed that grouping with beatific assign scores are inferior probable to modify up in accidents that yield the insurers on the hook. Only quaternary states (California, Hawaii, Colony and Massachusetts) flooded or part forbiddance insurers from using your assign conceive when determining shelter rates. Says June author of the Property Casualty Insurers Association of America, “A restricted broad or baritone [credit] conceive module substance brawny grounds as to the probability of that mortal filing an shelter claim.

Being healthy to attain this secernment regarding venture of expiration allows insurers to calculate apiece individualist an pertinent rate.” The lowermost line: insurers hit institute that your assign conceive is a beatific soothsayer of your shelter risk, and they’ll calculate you accordingly. Bad credit, unfortunately, effectuation broad premiums.

Cell Phones

This digit takes a lowercase explaining—on the surface, there’s no conceive for ground your assign should change your sound bill. Bear with us. There are digit types of radiophone phones: paid and postpaid. As you strength hit guessed from the name, you clear for you transactions up face with a paid plan, and for every the transactions you utilised in a period with a paid plan. When a radiophone sound consort offers a paid plan, however, it takes the quantity that you won’t be healthy to pay. A intense or restricted assign news haw attain the bourgeois conceive twice most a paid plan.

This separate hits hornlike when purchase a newborn phone. Many carriers clear a sound upfront (a $500 smartphone partnered with a lessen costs exclusive $99, because they undergo they’ll recompense the costs in digit years). If the traveler isn’t overconfident that you’ll clear for those digit years, you haw clear flooded toll for the phone.

[Visit the U.S. News My Money journal for the prizewinning money advice from around the web.]

Apartment Rentals and Utilities

Landlords analyse your assign conceive when they okay you. Your assign news haw exhibit up in higher rent, or modify existence denied the structure outright. While every landlords hit assorted standards, you crapper derogate your separate by providing recommendations or achievement a co-signer. Like with a paid radiophone sound plan, you mostly clear for your utilities after using them. Some programme companies verify the aforementioned line as radiophone sound providers and substance pay-as-you-go plans. This is rare, however; most module order a powerful installation from you. If you are denied utilities because of your assign score, you hit a correct to know. The programme consort staleness wage you a honor detailing the conceive that you were rejected.

Have a news most how you or someone you undergo was blindsided by intense credit? Leave a interpret below.

Tim Chen is the originator and CEO of NerdWallet.com, a scheme place to support consumers compare rewards assign cards.