Credit scores are like that mysterious recipe your grandma never wrote down—everyone thinks they know the secret, but there’s a lot of misinformation floating around. If you’ve ever wondered whether checking your score will tank it or if closing an old card is a smart move, you’re not alone. Let’s bust some of the biggest credit score myths so you can make smarter financial moves.
1. Checking Your Credit Score Hurts Your Score
🚫 Myth: Looking at your credit score drops your points.
✅ Truth: Checking your own credit score is called a soft inquiry, and it does nothing to your score. The only time your score takes a small hit is when a lender checks it for a loan or credit card (hard inquiry). So, check your score as often as you want—knowledge is power!
2. Closing Old Credit Cards Will Boost Your Score
🚫 Myth: If you don’t use a credit card, you should close it.
✅ Truth: Closing an old credit card can hurt your score because it lowers your total available credit, making your credit utilization look worse. If that old card has no annual fee, just let it sit there—it’s helping your credit history!
3. You Need to Carry a Balance to Build Credit
🚫 Myth: Leaving a small balance on your credit card helps your credit score.
✅ Truth: Nope! Carrying a balance just means you’re paying interest for no reason. What actually helps your credit? Using your card and paying it off in full every month.
4. Your Income Affects Your Credit Score
🚫 Myth: The more money you make, the better your score.
✅ Truth: Your credit score doesn’t care if you make $40K or $400K. It’s based on factors like payment history, credit utilization, and credit mix. A high income might help you get approved for loans, but it doesn’t directly impact your score.
5. Debit Cards Help Build Credit
🚫 Myth: Using a debit card boosts your credit score.
✅ Truth: A debit card is basically cash, so it doesn’t get reported to credit bureaus. If you want to build credit, you’ll need a credit card, auto loan, or other reported credit accounts.
6. Paying Off a Loan Makes It Disappear from Your Report
🚫 Myth: Once you pay off a loan, it vanishes from your credit report.
✅ Truth: A paid-off loan can stay on your credit report for up to 10 years, which is actually a good thing—it shows a positive history. On the flip side, missed payments stick around for about 7 years.
7. All Debt is Bad for Your Score
🚫 Myth: Having any debt will ruin your credit.
✅ Truth: Responsible debt, like a mortgage or student loan, can help your score as long as you’re making payments on time. Lenders like to see that you can handle different types of credit.
8. You Need an 850 Score to Get the Best Deals
🚫 Myth: A perfect 850 score is necessary to qualify for low rates.
✅ Truth: Anything above 740 is considered excellent credit and usually qualifies you for the best interest rates. Chasing a perfect 850 score is like trying to get extra credit when you already have an A+.
9. Paying Rent and Utilities Helps Your Credit Score
🚫 Myth: If you pay your rent and bills on time, your credit score improves.
✅ Truth: Unfortunately, most landlords and utility companies don’t report on-time payments to credit bureaus. The good news? Some services, like Experian Boost, let you add rent and utility payments to your report.
10. Bankruptcy Ruins Your Credit Forever
🚫 Myth: Filing for bankruptcy means you’ll never recover financially.
✅ Truth: Bankruptcy is a setback, but it’s not a life sentence. Many people start rebuilding their credit within a couple of years by using secured credit cards and making consistent on-time payments.
Final Thoughts
Credit scores can be tricky, but now you’re armed with the facts! The key to a strong credit score is making on-time payments, keeping your credit utilization low, and being smart about debt.
What’s a credit score myth you’ve heard before? Drop it in the comments, and let’s talk about it!
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