Credit Score Myths and Facts Explained

Your credit score is an important factor when it comes to nearly every financial decision you have to make. From being awarded a loan to how much you’ll pay in interest. Unfortunately, because there are a lot of incorrect assumptions about credit scores, it can be difficult to know how to properly use credit and optimize your credit score. Let us help you sort through some of the most common myths about credit scores and highlight the truths.

Credit Score Myths and Facts:

Myth 1: Your Credit Score Will be Hurt because you Forced to Check It.

Fact: You won’t adversely affect your credit score when you check your own credit score.
I often hear people say, “Checking my credit report will hurt my score” – when that couldn’t be further from the truth. Reviewing your credit report is through a soft inquiry and won’t impact your score. The other hand, a hard inquiry, like requesting a loan or applying for a new credit card, could drop your credit rating a few points.

Myth 2: Closing a Credit Card Will Improve My Score.

Fact: Closing a credit card account can hurt your credit score.
When you close a credit card, you lower your available credit limit usually resulting in a higher credit utilization percentage. A high credit utilization percentage will hurt your credit rating. Plus, if you ever want to improve your credit rating, keeping an older account in good standing will help.

Myth 3: I Should Carry a Balance to Improve My Credit Score.

Fact: Paying off your balance in full does not hurt your credit score.

Individuals believe that keeping a balance on their credit card is a good idea because it counts toward their credit score. However, if you pay the balance off each month credit score shows that you are responsible for money management and you avoid paying interest on that amount. Again, the important thing is to consistently pay on time.

Myth 4: Your credit score is based on your income

Fact: Your credit score is based on behavior, not the size of your paycheck.
Your salary does not matter; what is being evaluated by credit bureaus is the amount of credit you have available; length of credit history; payment history; inquiries for new credit; and the mix of credit. Sure, if you earn a higher income you can pay off amounts owed more easily; however, it is more important to be responsible and have acceptable habits in regard to credit.

Myth 5: Credit score only matters for creditors or credit cards

Fact: A good credit score matters for many things.
Landlords, utility providers (i.e. water, electric, gas), insurance companies, and even employers use scores to help them make decisions. A good credit score can help you get approved for an apartment, have a lower insurance rate or even get hired.

Myth 6: All Credit Scores Are Created Equal

Fact: Credit scores come in different scoring models.
There are numerous scoring systems out there, such as FICO® and VantageScore®, and they will likely have different combinations of factors used to calculate mortgage scores. Furthermore, lenders can use different versions of these credit score models for different kinds of loans. For the complete picture of your credit health and worthiness, use the score from different resources.

ALSO READ: Top 5 Best Credit Cards for First-Time Users in India for 2025

Knowing the facts of credit scores can help you to make more informed financial decisions. Once you stay on top of your payments, keep older accounts from closing due to inactivity, and monitor your credit report; you will be able to build and protect your credit profile successfully.