Because these activities result in inquiries into the borrower's credit report and recent credit inquiries can produce a lower score, the consumer is unknowingly engaging in non-debt related activity which lowers the credit score. Consumers do not know what steps to take to improve a credit score. Consumers may erroneously believe that closing old credit accounts and consolidating debt will improve their credit standing. However these actions can result in lowered credit scores by affecting borrowing history and by increasing debt to credit limit ratios. Credit scores are based on credit reports which often have errors.
Credit scores use information found in a consumer's credit report.
However, credit reports frequently contain errors. Consumers must rely on creditor action to maintain a current credit report. Some credit granters fail to report positive consumer activity to the credit reporting agencies. This can result in lower scores because good payment records are not being considered. Consumers must find and correct credit record mistakes made by credit reporting agencies.