Obscure Credit Score Facts from Liz Pulliam Weston

I listened in yesterday to The Personal Finance Hour, a radio show hosted each Monday by J.D. at Get Rich Slowly and Jim at Bargaineering. This week's episode featured Liz Pulliam Weston, author of Your Credit Score: Your Money and What's at Stake. 

Liz covered many of the points that regular Spend On Life readers will already be familiar with, like the 5 main factors that make up a credit score. But there were plenty of other interesting tidbits that went beyond the basics. You can listen to the 60-minute show (I've embedded it above), or simply scan the list of the points I found most interesting (below):

1. Your utilization rate really only matters when it comes to your revolving accounts (i.e. credit cards), not your installment loans (i.e. car and home loans). Credit card utilization rate makes up 30% of your score, so it's important to calculate yours to see if it needs tweaking.
2. You won't see a huge jump in your credit score after paying off your mortgage or auto loan. But you will see a big difference in your score after paying off a credit card. This is because credit scores put more weight on how you use your revolving —not your installment —accounts. Though a former FICO exec did call into the show and say that those with excellent credit scores often had several paid-off installment loans under their belts.
3. Liz has heard anecdotally that being 30 days late on a credit card payment can lower your score by 100 points. Ouch!
4. After forgetting to return a library book, Liz ended up with a $45 collection account on her credit report. She says that this addition to her credit report dropped her score by 60 points. She disputed the collection account, claiming it wasn't hers. The bureau didn't bother verifying her claim, and simply dropped it from her report. Her score went back up in a couple of months.
5. If you're building credit from the ground up and don't qualify yet for a unsecured credit card, try getting a secured card. Just make sure that it reports to all three bureaus, and that after a certain number of on-time payments, it converts to a regular credit card.
6. The optimal number of credit cards to have remains a mystery. Having a lot of cards isn't a bad thing, if you use them properly. If you have only two or three cards, make sure they are with different companies to help protect yourself against across-the-board slashed limits or hiked interest rates.
7. Business credit cards do sometimes show up on your personal credit report, so if possible, try to make the payments on it yourself to remain in control.
8. According to Liz, 1/3 of all employers now pull potential employees' credit reports, mainly to judge their likelihood of stealing from the company based on their personal financial situation.
9. Most people that declare bankruptcy declare it about two years too late. Liz was working with an elderly couple who faced financial difficulties. The couple drained their retirement accounts trying to avoid bankruptcy, only to end up declaring it anyway. Now, they're credit score is ruined and they don't have any retirement funds. Liz points out that many retirement assets are protected from bankruptcy, so if bankruptcy appears imminent or seems to be your only option, don't try to stop it using a 401k or IRA. Rather, declare bankruptcy before draining those funds, so at least you won't have lost everything.