FICO Exposes The Credit Score Myths That Social Media Keeps Spreading

When it comes to credit, don’t believe everything you see on the Internet. Social media hacks and finfluencers talk a good game, but they often mislead borrowers about the best ways to build and manage credit.

Don’t be fooled. The truth about building up a good credit score is that the process is boring but easy to follow once you know what matters.

It starts with paying bills as agreed and not going near the limits on your credit cards. Payment history makes up 35% of FICO scores, and amounts owed, including credit utilization, accounts for 30% of a FICO Score. Length of credit history accounts for 15%, while credit mix and new credit each account for 10%

The BadCredit team recently spoke with Jenelle Dito, Vice President of Consumer Empowerment Programs and Partnerships at FICO, about the right kinds of credit advice and steering clear of any expert that calls credit “bad,” and why it’s important to check your credit score before applying for credit. 

She also told us about consumer misconceptions regarding credit scores, how to build credit, and what happens when consumers follow bad credit advice. Read on below for more of our conversation with Jenelle Dito. 

BC: So from FICO’s research, what’s the biggest misconception consumers have about credit scoring?

JD: There continues to be misconceptions around, number one, that checking your score will harm your score. So we always want to reiterate to consumers that they have the right to check their FICO score and there’s no impact.

There are misconceptions around how much it should cost to check their score. And of course there are services that are paid, but there’s numerous access to FICO scores for free. And so we always want to be able to share that as well.

BC: What’s one credit score myth that you see gaining traction online right now that’s especially misleading or harmful? And what role are social media influencers playing in this?

JD: There’s a lot of information out there in social media with the finfluencers and these really kind of catchy pieces of information that aren’t always accurate and so battling with kind of the boring truth is always a challenge.

There can be some clicky fun things around how to game the payment system. And that really just gets consumers into trouble when the reality is just pay your bill on time and as agreed.

BC: How key is using credit to building up your credit history? 

JD: One of the other really important parts about building credit is using credit. And so a lot of people will misinform that credit is bad and to avoid credit. But you need to be in the system to get access to the system.

So it’s ill-advised to follow the guidance that all credit is bad because, again, there’s responsible credit that doesn’t cost you anything. If you pay the bill off in full, there’s no interest. 

BC: What are the real consequences when consumers act on bad information, like some of the examples you talked about, when it comes to their credit scores?

JD: Really the most important part in knowing your score is that step of checking your score. So some really bad things happen when consumers make assumptions around what their score is.

I think I have a good score, now I’m gonna go apply for the car that I need and only then being surprised by the fact that their FICO score isn’t where they thought it was.

They’ve either been checking a site that doesn’t share FICO scores or they’ve made some assumptions around some old information and then they show up needing access to that credit and not being where they think they are.

BC: What can issuers, credit bureaus, or even content creators do better to help consumers access more reliable, accurate information?

JD: I think there’s always that opportunity to reiterate the basics, not fall into the trap of looking for something shiny and new. 

There’s always new people coming into the credit population, whether they’re young people or returning to credit. So your audience is always refreshing and starting at the basics so repeating that same information can be really helpful.

BC: How does FICO plan to play a role in improving consumer understanding of credit scores?

JD: FICO has an important role to play in consumer understanding because we are the brand that is associated with the FICO score, of course, and then broadly in credit scoring. 

So bringing information to consumers through our partners, through our banking partners, through media, and then directly from my FICO is really our obligation to be able to bring that correct information and be a source of truth there. So we don’t take that lightly. 

We do invest heavily into that consumer education space. We also invest in educating young people and bringing credit education into high schools and into the curriculum. We have partnerships that help us distribute that because it’s never too young to learn some of these basics and get those fundamentals introduced.