Editor’s Note: This is a guest post by Dara Duguay, a financial literacy advocate who is the author of “Please Send Money: A Financial Survival Guide for Young Adults on Their Own.”   

There are many misconceptions about credit reports. The best way to understand the function of a credit report is to think of it as your own financial file cabinet. Information about your financial life is stored in a credit report and this history serves as the basis for companies to make decisions about the likelihood that you will be a responsible money manager. To annually obtain free copies of your credit reports from the three major credit bureaus, go to www.annualcreditreport.com.

To dispel some of the most common myths about credit reporting, Experian has put together a great list of not only the myths, but also the reasons why they are inaccurate. Take a look:

Myth #1:  When paid, the bad debt will go away.  A credit report is a history. Consumers often pay a neglected debt and then demand that it is removed entirely. However, the non-payment is still part of the consumer's history.

Myth #2:  The credit reporting company denied me credit.  Adverse action letters are now required to tell consumers that the credit reporting company did not make the decision. Instead, it was the lender who made the assessment.

Myth #3:  I'm not responsible for those charges on "our" account.  College students are often hit for joint accounts such as phone bills. A roommate moves out and doesn’t pay and the other is stuck with the bill. If your name is on a joint account, it is your debt no matter what.

Myth #4:  Consumers must give permission for a report to be issued.  Written permission is required only for reports requested for employment purposes. Otherwise, lenders can check your report at will.

Myth #5:  Requesting your own report and preapproved offers harms your credit history.  Inquiries have minimal impact in all cases, but inquiries resulting from accessing your own report or from preapproved offers are shown only to you and cannot be viewed or scored by others.

Myth #6:  There is only one credit score and it is on every report.  There are many different models that are used by different companies. Generally higher score results in lower risk but in some models a low score represents low risk. For example, FICO is just one scoring model and not the generic word for all credit scores.