Common misconceptions about credit

To commemorate Get Smart About Credit Day, which was honored on October 20, the American Bankers Association Education Foundation recently released some of the most common credit myths among consumers.

For instance, a frequent misconception is that if someone is young and has never missed a payment, they should automatically qualify for a prime interest rate. While the timing of payments is important, ABA says it's one of several factors banks must consider, as lenders want to see a long history of on-time payments and different loan types.

"We recommend that people start small and start young," said Laura Fisher, executive director of the ABA Education Foundation. "Make payments on time and never take on more debt than you can handle. Eventually you will develop a positive payment history that will help you get the best possible interest rate."

Some consumers may also mistakenly believe that credit reports are completely accurate. Errors can happen, though, and some of them can result in credit scores being lowered. This can be avoided if individuals keep track of their financial history and consult with a credit repair company if they spot something that's wrong.