Your credit score plays a crucial role in your financial health. It affects your ability to get loans, rent an apartment, and even secure a job in some industries. Yet, despite its importance, there’s a surprising amount of misinformation surrounding credit scores. Believing in these myths can prevent you from making smart financial decisions. Let’s break down some of the most common credit score myths you should stop believing.
Myth 1: Checking Your Own Credit Score Hurts It
This is perhaps the most common myth—and it’s flat-out wrong. When you check your own credit score or credit report, it’s considered a soft inquiry, which does not affect your score. Only hard inquiries, which happen when a lender checks your credit for a loan or credit application, may have a slight and temporary impact.
Regularly checking your own credit is actually a good habit. It helps you monitor changes, catch fraud early, and track your progress as you build your score.
Myth 2: Closing Old Credit Cards Will Improve Your Score
Closing a credit card account—especially an older one—can actually hurt your score. Here’s why: credit scoring models consider the length of your credit history and your credit utilization ratio (how much credit you’re using vs. how much you have available). Closing a card reduces your available credit and can shorten your overall credit history, both of which may lower your score.
If you don’t use a card often, consider keeping it open with occasional small purchases, rather than canceling it entirely.
Myth 3: You Need To Carry A Balance To Build Credit
Carrying a balance month to month does not help your credit score—it just costs you money in interest. What actually builds your credit is making on-time payments and keeping your credit utilization low (ideally below 30% of your total available credit). You can pay your balance in full each month and still build excellent credit.
Myth 4: A High Income Equals A High Credit Score
Your income and your credit score are not directly linked. Credit scores are based on your credit behavior—not how much you earn. This includes your payment history, credit utilization, length of credit history, new credit inquiries, and types of credit in use.
Someone with a modest income who pays bills on time and keeps credit use low could have a higher score than someone with a large income who misses payments or maxes out their cards.
Myth 5: All Debt Is Bad For Your Credit Score
Not all debt is harmful—what matters is how you manage it. Responsible use of installment loans (like student loans or car payments) and revolving credit (like credit cards) can actually help your credit score. Making consistent, on-time payments and managing a mix of credit types shows lenders that you’re a responsible borrower.
Myth 6: You Only Have One Credit Score
In reality, you have multiple credit scores. Different credit bureaus (Equifax, Experian, TransUnion) and scoring models (FICO, VantageScore) calculate your score using slightly different formulas. That’s why your score might vary depending on where you check it. Still, the key behaviors that impact your score—like payment history and credit utilization—are consistent across all models.
Final Thoughts
Understanding how credit works is essential for managing your financial future. Believing in myths can lead you to make costly mistakes or miss out on opportunities to improve your score. Stay informed, focus on paying bills on time, keep your balances low, and don’t be afraid to check your score regularly. When it comes to credit, knowledge truly is power.
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