However, when the credit counselor negotiates a lesser contractual obligation, the lender decides how he wants to report that. So if your $500 monthly payment is refigured for $300, the creditor may either legally report that as $200 in arrears every month or reward you for not filing bankruptcy by reporting the account as up-to-date.

Although credit counseling does not greatly influence your credit score, it is apparent on the report that you've been through counseling -- and that is something individual lenders may not like. Their responses vary greatly. Some will consider you radioactive and not deal with you for years. Others will charge you higher rates. A few may even cut you a break.

In the real world, says John Waskin, executive director of BillFree American Credit Counselors in Huntersville, N.C., auto lenders tolerate credit counseling the least.

"Once most car dealers see that you're on debt management or credit counseling, they have an opportunity to take advantage and charge you an exorbitant rate," he says.

Others, such as GMAC, will actually improve your score to give you a loan after you've worked with credit counseling for at least eight months because this route paints you as a responsible person. But as a blanket rule, he asks potential clients to delay joining his program until after the transportation loans are settled.

On the credit card side, "if you call Bank of America or First USA three times and ask three different people, you'll get three different answers," Waskin adds. "Approximately 45 percent of underwriters say credit counseling is a good thing, 25 percent think this is akin to bankruptcy."

The remaining 30 percent vary their answers, depending on their mood that day.

3. Canceling credit cards boosts my score.
Open accounts spells available, potential debt, so better close them, runs the legend. But experts agree that most creditors want to see at least two or three pieces of active credit to prove you can manage debt responsibly.

And, Ulzheimer chimes in, those unused cards lying in your jewelry box aren't wreaking havoc with your score.

"The myth is that they look ominous to potential lenders," he explains. "Reality is that paying your bills on time and not being overextended is more important than having $5,000 worth of available credit on a card you're not using. We continue to evaluate this 'open to buy' statistic, and we simply don't find it falling into one of those highly predictive areas."

On the other hand, extremes never look good. Opening one charge account occasionally to take advantage of a 10 percent offer is negligible. Going wild and signing up for 15 during the holiday season probably would invite a decreased score, he notes.

4. Too many inquiries hurt my score.
Once upon a time, this statement was true. But get with the times -- in this millennium, the credit agencies recognize a shopping mindset when they see one. If a batch of mortgage or car loan inquiries arrive within a 30-day period, they don't count at all, Ulzheimer assures.

"Outside that 30-day period, if we locate a mortgage or car inquiry that occurred 180 days ago, and then see more mortgage or auto-related hits in the accompanying 14-day window, we err on the consumer's side and still assume she's shopping for one item," he explains.

"We really feel like we are capturing the true consumer experience and not holding it against them for being an aggressive or smart rate shopper," he adds.

Furthermore, there's no such thing as some fixed number of points associated with these inquiries, Ulzheimer says.

"Inevitably when a consumer or a lender evaluates a credit file, they think this item must be worth 20 points, this is worth 100 points," he says. "In reality we try to evaluate credit reports so that the information is given a reasonable or statistically valid number of points."

In English, that means FICO is designed to predict the likelihood of an account going bad under given circumstances. Some things have predictive value and some don't. Inquiries fall in the middle.

"They're not incredibly predictive, so they're in the model but they don't drive the boat," Ulzheimer says.

5. Checking my own credit report harms my standing.
The reporting agencies distinguish between soft and hard pulls. When Target calls to check before issuing its line of credit, the agencies chalk that up as a hard pull and it counts against your score. Personal requests and credit counselors -- if they do it correctly, so insist on this as part of your agreement terms -- fall under soft pulls, which do not reflect on the evaluation.

Using a company that promises credit reports as a perk can turn this myth into a self-fulfilling prophecy, however, says Deborah McNaughton, owner of Professional Credit Counselors and author of the Get Out of Debt Kit. Because they are merchants in disguise, their freebie costs you. Citizens must go directly to the three bureaus if they want a soft pull. Ditto FICO.

"Pulling your credit scores is quite empowering," says Ulzheimer. "You have a choice: you can either be very aggressive with your credit management and pull your score with some regularity or take a more passive approach once a year to see where all those credit cards actually sit."

6. FICO scores are locked in for six months.
Fair Isaac and Company's models are dynamic, meaning they change as soon as data on the credit report changes.

"When we calculate a score, for all intents and purposes it then goes away and is recalculated the next time someone pulls your file," says Ulzheimer.

7. I don't need to check my credit report if I pay my bills on time.
When the Consumer Federation of America and the National Credit Reporting Association analyzed credit scores in the summer of 2002, they discovered that 78 percent of the files were missing a revolving account in good standing, while 33 percent of files lacked a mortgage account that had never been late. Twenty-nine percent contained conflicting information on how many times the consumer had been 60 days late on payments.

"There can be a lot of other activity going on that you don't have any clue about," McNaughton notes.

In her experience, 80 percent of all credit reports have erroneous information ranging from a wrong birth date to accounts you never applied for.

8. All credit reports are the same.
Way wrong. These days, most creditors across the country do report their information to all three major agencies: TransUnion, Equifax and Experian.

But, "That was not true in the past," Sweet admits.

And, because they are separate companies, the speed in which they update records isn't necessarily equal.

Additionally, the agencies use inquiry activity to update your address, phone numbers, employment status and the like. Because creditors typically pull only one company's report, it's possible that, say, TransUnion doesn't show your current address.

According to McNaughton, she's never seen a client yet for whom all three reports spit out the same records and scoring.

9. A divorce decree automatically severs joint accounts.
The judge may have rubber-stamped your plans to divide credit card, car and house payments, but that carries absolutely no legal weight with the creditors themselves, Sweet reminds.

"We see so many people who, a year or two after the divorce, are just outraged and hurt because their credit report reflects their ex-spouse's missed payments," she says.

Unfortunately, at that point, they are helpless to erase the damage.

Divorcing parties must contact the creditors and either close current accounts or have the booted name sign a letter of consent for this action. And assuming certain debts isn't a unilateral decision on your part, notes Sweet. Creditors typically do a credit check on your name, and if they don't deem you financially stable enough to assume that $30,000 car loan, for instance, they won't agree to remove the other person.

10. Bad news comes off in seven years.
Some of it does. Chapter 13 (reorganization of debt) disappears seven years from the filing date. But if you filed Chapter 7 bankruptcy (exoneration of all debt), the window is 10 years from the filing date.

On the good news side, accounts in bankruptcy can be deleted seven years after the date of your first missed payment, so those individual pieces may disappear before the word "bankruptcy" on your report. And if you pay off or close an account that had no delinquencies or problems, it, too, remains on the record for 10 years rather than the previous seven, say Experian experts. Again, this means positive information hangs around longer, as a consumer benefit.

11. I can always pay someone to fix or repair my credit.

"Virtually any time someone says that, they're lying," Waskin says.

Yes, you can clear up erroneous information posted to your account, such as a repossessed car that you didn't purchase in the first place, but if you paid your Sears bill three months late in 1997, that's a hard fact.

Companies claiming to fix your credit deliver on their promises by generating a flood of dispute letters to the credit reporting agencies, which means the listing must come off at that time. But if you can't prove the information in question is incorrect, the agency slaps it right back into the file after 30 days.

"I had a client who wanted to negotiate a debt to a clothing store. We called the store, which had sold the paper to someone else and had no record of this transaction. The middleman sold it to yet another company, which didn't know what the heck I was talking about," Waskin says.

"So we told the credit reporting company if it couldn't verify the amount owned, it must take it off my client's record. But the consumer can do that without spending money for a company to write that letter."

-- Updated: Jan. 20, 2005