Your credit score can affect far more than your ability to get a credit card. Lenders, landlords, insurers, and even utility companies may consider your credit history when deciding whether to approve an application or what terms to offer. Because credit scoring can seem complicated, several myths continue to circulate. Here are some of the most common—and what’s actually true.
Myth 1: Checking your credit score lowers it
Checking your own credit score is considered a “soft inquiry” and does not hurt your score. You can review your credit report and score regularly to monitor for errors, suspicious activity, or changes in your credit profile.
What may affect your score is a “hard inquiry,” which typically occurs when you apply for credit. One hard inquiry usually has a small impact, but applying for several accounts in a short period can make you appear riskier to lenders.
Myth 2: Carrying a balance helps build credit
You do not need to carry a balance or pay interest to build good credit. In fact, carrying a high balance can increase your credit utilization ratio, which may lower your score.
Using a credit card responsibly and paying the balance in full by the due date is generally the healthiest approach.
Myth 3: Closing an old credit card improves your score
Closing a credit card can sometimes hurt your score, especially if it reduces your total available credit. That may increase your credit utilization ratio. It can also shorten the average age of your accounts over time.
If the card has no annual fee and you can manage it responsibly, keeping it open may be beneficial. However, closing an account may make sense if it encourages overspending or carries costly fees.
Myth 4: You only have one credit score
You may have many credit scores. Different credit bureaus can have slightly different information, and lenders may use different scoring models depending on whether you’re applying for a credit card, auto loan, mortgage, or another type of credit.
Small differences between scores are normal.
Myth 5: Income directly determines your credit score
Your salary, job title, and bank balance are not directly included in most traditional credit score calculations. Credit scores primarily reflect factors such as payment history, amounts owed, credit history length, new applications, and types of credit.
However, lenders may consider your income separately when deciding whether you qualify.
Myth 6: Paying off a debt instantly removes it from your credit report
Paying a debt is important, but accurate negative information generally does not disappear immediately. Certain accounts, such as late payments, may remain on a credit report for years under applicable reporting rules.
The good news is that the impact of negative information often decreases over time as you establish a consistent record of on-time payments.
Myth 7: You need perfect credit to qualify for anything
Perfect credit is not required for every credit card, loan, apartment, or service. Approval requirements vary by lender, and other factors—such as income, debt, down payment, and employment history—may also matter.
The most effective way to improve your credit is simple: pay bills on time, keep balances manageable, apply for new credit selectively, and review your reports for inaccuracies. Understanding the facts can help you make better financial decisions and avoid unnecessary damage to your score.
