Your Most Common Credit Questions Answered

Blog Post08/24/2017
Credit Advice

Staying on top of your finances requires educating yourself on various credit situations. The more you know about credit topics — such as what affects your credit scores, inheriting family debt and the statute of limitations for debt — the better you'll be able to manage personal finances.

From maintaining a positive credit history to rebuilding your credit scores after falling behind, having your credit questions answered can help you to stay on track.

Question: Will Checking My Credit Report Hurt My Credit Scores?

Answer:
Checking your own credit report won't hurt your scores. Credit inquiries are defined as either hard or soft inquiries.

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A hard inquiry happens when your credit is reviewed because you've applied for a credit card, mortgage, car loan or other financing. Hard inquiries indicate that you might be about to take on more debt and they may negatively affect your credit scores.

Reviewing your own credit report is considered a soft inquiry, and soft inquiries don't hurt your scores. Checking your credit report at least once a year allows you to identify any mistakes and helps you manage your personal finances.

Question: What Makes Up a Credit Score?

Answer:
Understanding the components that make up credit scores can help you wisely manage your credit decisions. A credit score is a three-digit number typically ranging from 300 to 850 that is calculated based on relevant information in your credit report. A higher number indicates to lenders that you're more likely to repay any borrowed money.

Although the weight of the factors may vary between different credit scores, five main factors generally go into calculating credit scores. Each factor receives a different amount of weight.

For example, your payment history is often the most influential factor that affects your score. The age of your accounts, the types of credit you carry and the percentage of your available credit that you've used are also highly significant.

The amount of debt that you're carrying is important as well. The final three aspects, which typically count to a lesser degree, are recent credit behavior, new inquiries and your available credit.

Question: My Mother Died and Left Some Credit Card Debt. Do I Have to Pay It?

Answer:
You're not responsible for your mother’s debt as long as you weren't a joint owner on the credit card account. The debt cannot affect your credit scores if your Social Security number is not associated with it.

The credit card company may still attempt to contact you regarding the debt. You will need to explain that your mother has passed away and provide a copy of the death certificate.

The credit card company may also contact your mother’s estate for payment if her will is executed through probate court. The debt will most likely be paid through probate if her estate has enough funds, but you're not personally responsible for your mother’s credit card debt as next of kin.

Question: A Debt Collector Has Contacted Me About an Old Debt. Do I Have to Pay It?

Answer:
You're responsible for all debt acquired in your name, regardless of when it was incurred. Most unpaid debt will remain on your credit report for seven years. Each state has a statute of limitations on the length of time a creditor has to sue you for unpaid debt.

Statutes range from 2 to 10 years, depending on the state and the type of debt. Once the statute is up, the creditor cannot sue to collect payment, but this doesn't mean you no longer owe the debt.

You’re not locked in if you took out private student loans, either. If you have more than one, you might look into consolidating them. Depending on how many payments you’ve already made toward your initial loans, your outstanding balances may be lower. This could result in lower payments as you get on your financial feet, since you’re borrowing less this time around. You can also refinance private loans if you find a more favorable interest rate and terms.

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