There are many questions we all have about our credit scores and how they affect our everyday lives.

Does my score alone determine whether or not I get credit?

Lenders use a number of facts to make credit decisions, including your FICO^® Scores. Lenders look at information such as the amount of debt you can reasonably handle given your income, your employment history, and your credit history. Based on their perception of this information, as well as their specific underwriting policies, lenders may extend credit to you although your score is low, or decline your request for credit although your score is high.

Will a poor score haunt me forever?

Just the opposite is true. A score is a “snapshot” of your risk at a particular point in time. It changes as new information is added to your bank and credit bureau files. Scores change gradually as you change the way you handle credit. For example, past credit problems impact your scores less as time passes. Lenders request a current score when you submit a credit application, so they have the most recent information available. Therefore by taking the time to improve your scores, you can qualify for more favorable interest rates.

Can I be discriminated against due to my poor credit score?

Scoring considers only credit-related information. Factors like gender, race, nationality and marital status are not included. In fact, the Equal Credit Opportunity Act (ECOA) prohibits lenders from considering this type of information when issuing credit. Independent research has been done to make sure that credit scoring is not unfair to minorities or people with little credit history. Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history. In other words, at a given score, non-minority and minority applicants are equally likely to pay as agreed.

Why do some employers want my credit score when applying for a job?

Employers sometimes check credit to get insight into a potential hire, including signs of financial distress that might indicate risk of theft or fraud. They don’t get your credit score, but instead see a modified version of your credit report. Credit checks are more likely for jobs that involve a security clearance or access to money, sensitive customer data or confidential company information. Such checks also may be done by your current employer before a promotion.

Do I have to carry a balance on my credit card to improve my score?

This is perhaps the greatest credit card misconception of them all — that you’ll need to carry a balance on your credit card to establish a good credit score. It’s 100% false. According to CreditCards.com – 35% of your score is based on your payment history; 30% for credit utilization; 15% for length of credit history; 10% for new credit accounts; and 10% for credit mix. Nowhere in there does it say you’d need to carry a balance. Instead, making your payments on time and avoiding charging too much on your credit cards relative to your available credit limit is the best recipe to improve your score.

Will my score drop if I apply for a new credit card or loan?

If it does, it probably won’t drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report information (called “inquiries”) will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

Do I really need credit? Can’t I just use cash or pre-paid credit cards?

Though it’s true that sticking with debit cards and prepaid cards will ensure you won’t dig yourself into a debt hole, living your life without establishing credit could mean bad news elsewhere.

You’re probably well aware that credit scores are used when determining whether or not you qualify for a mortgage or auto loan, but did you know that landlords often access your credit score when you’re looking to rent, and employers sometimes want access to your credit report before hiring you? If you have no credit history, it could cost you the apartment or job you want. Furthermore, insurers occasionally examine your credit history, too, as studies have shown that people with poor credit tend to be costlier to insure.

What credit score do I need to buy or build a house?

A low credit score won’t put you out of the running, but your scores will play a large part in determining the interest rate you pay on your loan. Generally speaking, the lower your credit scores, the higher the interest rate you’ll have (meaning, you’ll pay more in interest each month).

Most lenders offer several interest rates, depending on what credit score category you fall into. A lower score can be offset by strengths in other areas of the application (compensating factors), like a higher down payment. Again, a mortgage underwriter is most concerned with your total financial picture and will examine the factors that contribute to your score.

Can I become an authorized user of someone else’s credit card to increase my credit score quicker?

By being added as an authorized user, you’re inheriting the primary account holder’s credit habits. The first, and most important, thing to look for: whether the account holder pays their bills on time. If the primary account holder does not make timely payments, it gets reported on the credit reports of authorized users. It doesn’t take much, or long, to begin to negatively impact your credit score. Credit card issuers report late payments to credit bureaus.

And late payments, as bad as they are, are not the only thing that can hurt you. If the account in question has a high utilization rate that also weighs heavily on your credit score. So it’s best to do your own due diligence. Otherwise, instead of working to build a positive credit history, you may find yourself achieving exactly the opposite.

Is co-signing the same as being an authorized user?

No. If you have children with little credit history, or have friends or family members with little or poor credit history, you may be called upon to co-sign for a credit card, auto loan, or even their apartment. No big deal, right?

Wrong! Co-signing has real financial risks to you if the person you co-sign for doesn’t make their payments on time, and they could include adverse effects on your credit score. According to TransUnion, the only way to end the dual liability of being a co-signer is to have one party refinance the loan, or persuade the creditor to formally take you off the account. In other words, think twice about co-signing for someone if you have a good credit score.

Why should I even care what my credit score is – I am not buying any major purchases in the near future?

Monitoring your credit can be a great way to know what’s going on behind the scenes in your finances. Even if you stay on top of all of your loans and closely monitor your bank accounts, stuff might be happening that you aren’t aware of. Maybe you have some open loans that you thought were closed years ago, or maybe someone is fraudulently using your identification. Whether you monitor your credit personally, or use a credit monitoring service, you need to know what’s going on.

Will I be penalized for checking my own credit scores?

A credit score myth is that you’ll be penalized when you check your credit score. The truth is that credit agencies differentiate what’s known as “soft inquiries” from “hard inquiries”. Soft inquiries, such as checking your credit score, won’t change your credit score one way or the other. However, hard inquiries, which is where a lender delves into your credit history for the purpose of opening an account, do tend to knock a few points off of your score. In other words, checking your score isn’t an act that should be feared.