Debunking 10 Common Credit Score Myths

Understanding your credit score can feel overwhelming, especially with so much misinformation out there. Misconceptions can lead to poor financial decisions, leaving you with lower scores and higher costs in the long run. To help you take control of your financial health, we’re debunking 10 common credit score myths, providing actionable tips to keep your credit strong.

1. Checking your own credit hurts your score

The truth:

Reviewing your credit with a “soft inquiry” won’t affect your score. Soft inquiries happen when you check your own credit report or when a lender pre-screens you for an offer. Only “hard inquiries,” such as a lender reviewing your credit for a loan application, can have a minor impact on your score.

Actionable tip:
Make a habit of checking your credit through free tools like AnnualCreditReport.com. Look for errors or fraudulent activity, which can hurt your score if unnoticed. Regular reviews can help you catch issues early without penalty.

2. Closing old credit cards improves your credit

The truth:

Closing an old account can backfire. Your credit score factors in the length of your credit history and your credit utilization ratio (the percentage of your available credit in use). When you close an old card, you reduce your total available credit, potentially increasing your credit utilization percentage. Shorter credit history and higher utilization can both lower your score.

Example:
Imagine you have two credit cards with a combined $10,000 credit limit. If you carry $2,000 in balances, your credit utilization is 20%. Close one card with a $5,000 limit, and your utilization jumps to 40% overnight—even though your spending hasn’t changed!

Actionable tip:
If you want to simplify your accounts, consider downgrading an old card to one without an annual fee rather than closing it entirely. This way, you maintain your credit line.

3. Your income is part of your credit score

The truth:

Income isn’t included in your credit score calculation. Instead, your score is based on five core factors: payment history, amounts owed, length of credit history, credit mix, and recent credit inquiries. While lenders may look at your income during loan applications, it doesn’t directly affect your credit score.

Actionable tip:
Focus on what you can control. Pay bills on time, keep debts manageable, and maintain a healthy mix of credit lines rather than worrying about how much money you make.

4. Carrying a monthly balance boosts your score

The truth:

This persistent myth can cost you unnecessary interest. Carrying a balance doesn’t help your score. Payment history (35% of your score) is what matters most. Paying your card off in full each month demonstrates responsible credit use without accumulating debt.

Example:
If your balance is $1,000 and your interest rate is 20%, carrying that balance would cost you $200 annually in interest. Avoid this expense by paying off the balance on time.

Actionable tip:
Use your credit card for essentials like groceries or utility bills, then pay the balance in full every month to build credit without accruing interest charges.

5. You only have one credit score

The truth:

You have many credit scores—not just one. Different credit bureaus (Experian, Equifax, and TransUnion) calculate scores differently based on the information they have, and lenders might use their own scoring models, like FICO or VantageScore. Consequently, your scores may vary slightly depending on where they’re pulled from.

Actionable tip:
Don’t stress minor score differences. Focus on the shared principles across all scoring models, like maintaining low balances and making on-time payments. When applying for credit, ask lenders which score they use to prepare more effectively.

6. Debit cards help build credit

The truth:

Debit card activity doesn’t appear on your credit report. Since money is withdrawn directly from your checking account, there’s no borrowing involved. Building credit requires using products like credit cards, loans, or lines of credit, which are reported to credit bureaus.

Actionable tip:
If you’re new to credit, a secured credit card is a great start. You deposit money upfront as collateral, and the card issuer reports your payment history to bureaus. Use it responsibly for small purchases and pay off the balance to build a positive credit profile.

7. Paying bills on time is enough for a great score

The truth:

Paying bills on time is critical but not the only factor in achieving a stellar credit score. Your score also considers how much debt you carry, the types of accounts you hold, the length of your credit history, and recent credit inquiries. Focusing solely on payment timeliness neglects other opportunities to strengthen your score.

Example:
Someone with a perfect payment history but maxed-out credit cards may still have a lower score than someone who uses less than 30% of their available credit.

Actionable tip:
Aim to keep your credit utilization below 30%, diversify your credit mix (e.g., a mortgage, car loan, and credit card), and resist opening too many accounts within a short period.

8. Student loans and medical bills don’t matter once they’re paid off

The truth:

Even after you’ve paid off loans or bills, their history can stay on your credit report for years. Positive accounts display for up to 10 years, while late payments or defaults remain for 7 years. This history matters because lenders assess your overall financial behavior—not just your current standing.

Actionable tip:
Pay all bills on time and, if possible, negotiate before any unpaid debts are sent to collections. If you’ve had past issues, focus on creating new positive habits to gradually rebuild your score.

9. You can fix a bad score overnight

The truth:

There’s no quick fix for a low credit score. Overnight improvement isn’t realistic because your score relies on long-term behavior patterns. The best way to raise your score is by consistently paying bills on time, reducing high balances, and avoiding new hard inquiries.

Example:
If your score drops due to high credit utilization, bringing your balances down more than likely won’t boost it overnight. Lenders need to see sustained good behavior over several months to consider you less risky.

Actionable tip:
Focus on one change at a time, such as automating your payments or paying down one credit card balance. Celebrate small milestones to stay motivated while working toward long-term improvement.

10. Marrying someone with bad credit means your score will drop

The truth:

Credit scores are unique to individuals. Your spouse’s credit history won’t merge with yours automatically. That said, any joint accounts (like mortgages or shared credit cards) will impact both of your scores. Poor management of a joint account could damage your credit even if your personal habits are solid.

Example:
If you and your spouse open a joint credit card and they miss a payment, the late payment will be reported on both your credit histories.

Actionable tip:
Before opening joint accounts, communicate openly about financial goals and habits. Consider keeping some accounts separate to protect your individual credit while working together on shared responsibilities.

Your credit score impacts many aspects of your financial life, from approving loans to determining interest rates. By separating fact from fiction, you’re better equipped to make smart decisions. Review your credit regularly, use debt responsibly, and focus on consistent, positive habits to strengthen your score over time. Armed with accurate knowledge, you’ll be well on your way to improving your financial future.