When it comes to credit scores, there’s no shortage of bad advice floating around. Some of it is thanks to well-meaning but misinformed friends or outdated financial knowledge, and other myths just refuse to die.
The problem? The wrong notions about credit can cost you—literally. Whether it’s failing to qualify for a more favorable interest rate or doing something that actively hurts your score, bad information can set you back. So, let’s get the air cleared and put the record straight on some of the biggest credit score myths.
Myth #1: Checking Your Own Credit Score Hurts Your Score
Have you ever been scared to check your credit score because you thought that it would lower your score? If so, you’re not alone. But the truth is, checking your own credit doesn’t have any effect on your score.
There is a difference between a “hard inquiry” and a “soft inquiry.” A soft inquiry is when you check your score using a free credit score monitoring service or when a lender pre-approved you for an offer. Those have no impact on your credit. Hard inquiries do occur when you’re trying to get a loan or credit card, and an excessive number of them in a short period of time can negatively affect your score slightly. Checking your own credit, though? Totally safe—and a habit well worth getting into!
Myth #2: You Need to Carry a Balance to Build Credit
This is an oldie but a lingering myth. There are people who believe that carrying a credit card balance and making small payments is good for their credit score. Makes sense, right? Nope.
The reality is that paying your full balance each month is the most positive thing you can do. Why? Because it spares you from paying interest and enables you to maintain a low credit utilization ratio—one of the biggest determiners of your score. So, if you’re carrying a balance on your card because you believe it’s going to benefit you, you’re actually just providing the credit card company with free money. Pay it and save yourself the earned cash.
Myth #3: Closing Old Credit Cards Benefits Your Score
Have an old credit card simply sitting in your wallet that you never use? You might be considering that it will help your credit score if you close it, but it’s quite the opposite.
Your credit score is based on a range of factors, including the length of time you’ve had credit and your credit utilization ratio. By closing an older account, you are effectively shortening your credit history and increasing your credit utilization (since you have less available credit), both of which can lower your score. Instead of closing it, consider holding on to the card and using it periodically for small purchases to keep the account active.
Myth #4: Your Income Affects Your Credit Score
The higher you earn, the higher your credit score, right? Not so.
While your income can help you qualify for credit cards or loans, it will not affect your credit score. Credit scores are based on things like payment history, credit utilization, and account age—not on your income level. That means even someone with a six-figure income can have an awful credit score if they’re not managing credit wisely. The trick? Paying bills on time and keeping your debt in check, no matter how much you’re earning.
Myth #5: All Debt is Bad for Your Credit Score
Debt gets a bad name, but not all debt is created equal. Most people think that having any kind of debt will destroy their credit score, but this just isn’t true.
In fact, a mix of different types of credit—like a credit card, car loan, or home loan—can be good for your score if you’re paying them on time. Lenders need to know that you can manage different types of credit responsibly. The key is balance: too much debt is bad, but debt that’s managed responsibly can actually work in your favor.
Myth #6: You Have Only One Credit Score
Do you believe you have just a single credit score? Think again.
There are different credit scoring models; the most common are FICO and VantageScore. On top of that, other lenders can use different versions of these scores depending on the type of credit you’re applying for. That means you can have a somewhat different score depending on where you go to look for it. The good news is that if you’re practicing good credit habits, all of your scores will be in the same range.
The Bottom Line: Be Informed, Be in Charge
Believing credit myths can lead to costly mistakes, but now you’re aware of the truth, you’ll be able to make more educated decisions about your finances. Regularly checking your credit, paying balances in full, and not closing old accounts can all help your score in the long term. And if you’re keen to closely monitor your credit health, using a free credit score monitoring service is a great way of tracking your progress and spotting any issues early on.
Knowledge is power—especially when it comes to your credit. So, do not let outdated advice hold you back. Take control, make informed decisions, and watch your credit (and financial future) improve!