Your credit score isn’t just a number—it’s a gateway to life-changing opportunities like homeownership, car loans, and even job offers. Yet, despite its importance, many people are guided by misinformation and outdated beliefs about how credit scores work. These widespread myths don’t just create confusion—they can lead to costly mistakes, higher interest rates, and missed financial opportunities. In this article, we’ll uncover the most damaging credit score myths and reveal the truth behind them, helping you avoid pitfalls that could cost you thousands over your lifetime.
1. Checking Your Credit Score Hurts Your Credit
One of the most persistent myths is that checking your own credit score will lower it. In reality, when you review your credit through a reputable service, it’s considered a soft inquiry—and has zero impact on your score. Only hard inquiries—when lenders check your credit for a loan or credit card application—can cause a slight dip. Knowing the difference empowers you to monitor your score regularly without fear. Stay informed by reviewing your credit as often as you like; it’s a smart move, not a risky one. [Source: Experian]
2. Closing Old Accounts Always Increases Your Score
It’s a common misconception that closing old credit card accounts will automatically improve your credit score. In fact, shutting down these accounts can harm your score by shortening your credit history and raising your credit utilization ratio. Both factors play a significant role in how your score is calculated. Keeping longstanding accounts open—even if you rarely use them—can help maintain a healthy credit profile. Think twice before closing that old card; the age and available credit it offers might be more valuable than you realize. [Source: CNBC]
3. Carrying a Balance Improves Your Score
Many believe that carrying a balance on their credit cards will boost their credit score. The truth is, there’s no benefit to leaving a balance from month to month. In fact, the smartest move is to pay off your statement balance in full each month. Not only does this save you from paying high interest charges, but it also shows creditors you’re managing your debt responsibly. Don’t fall for this costly myth—your wallet and your score are both better off when you pay your cards off every month. [Source: NerdWallet]
4. Your Income Directly Affects Your Credit Score
It’s easy to assume that a higher income translates to a higher credit score, but your salary isn’t factored into credit score calculations. Credit scores are determined by how you borrow and repay money—not how much you earn. While lenders may review your income to assess your ability to repay, your score itself reflects only your credit behavior. Responsible borrowing and on-time payments matter most, regardless of your paycheck size. Don’t let this myth distract you from the real drivers behind your credit health. [Source: Equifax]
5. Paying Off Debts Removes Them from Your Credit Report
While paying off debts is always a smart financial move, it doesn’t erase the account’s history from your credit report. Even after a debt is paid, the record—including any late payments—can remain visible for up to seven years. This history helps lenders evaluate your long-term credit behavior and reliability. Positive actions matter, but your credit past follows you. Don’t expect instant removal of past issues just because you’ve settled your balance—patience and consistent good habits are key. [Source: CFPB]
6. Only Credit Cards Affect Your Credit Score
Many people mistakenly believe that only credit card activity impacts their credit score. In reality, your credit report also includes loans, mortgages, auto loans, and even some retail or service accounts. Installment loans—like student or car loans—play a crucial role in shaping your credit profile. Focusing solely on credit cards means overlooking other important factors that influence your overall score. A healthy credit mix demonstrates responsible management of different types of credit. [Source: FICO]
7. All Credit Scores Are the Same
It’s a myth that all credit scores are identical. In reality, there are several scoring models—like FICO and VantageScore—each with unique formulas and criteria. Lenders may use different versions or models, so the score you see from one source might vary from another. Understanding these differences can help you avoid confusion when monitoring your credit. Always check which score a lender is using before making major financial decisions. [Source: USA Today]
8. You Start with a Perfect Credit Score
A common misconception is that everyone begins with a perfect 850 credit score. In truth, you start with no credit score at all. Your score is established gradually, as you open accounts, borrow responsibly, and build a history of timely payments. It takes time and steady financial habits to reach a high score. Don’t be discouraged if your first score isn’t perfect—building credit is a journey, not an automatic starting point. [Source: Bankrate]
9. Employers Can See Your Credit Score
Another widespread myth is that employers can view your credit score when considering you for a job. In reality, employers may request your credit report—but only with your permission—and they cannot see your actual score. What they review is your credit history and patterns, not the numerical value. They’re typically checking for signs of financial responsibility, not judging your creditworthiness in terms of a specific number. Understanding this distinction can ease anxiety during a job search. [Source: FTC]
10. Medical Debt Is Treated Like Any Other Debt
Many assume that medical debt impacts your credit score the same way as credit card or loan debt. However, medical debts often have special protections. For example, there’s typically a delay before they’re reported to credit bureaus, and debts paid by insurance are often removed from your credit report. These distinctions mean medical bills might not hurt your score as quickly or severely as other types of debt. Understanding these differences can help you navigate medical bills and protect your credit. [Source: NPR]
11. Your Spouse’s Credit Score Affects Yours
It’s a common misconception that marriage merges your credit scores with your spouse’s. In reality, each person maintains an individual credit report and score. While joint accounts or co-signed loans can appear on both partners’ reports—and thus impact both—it’s the shared financial actions, not the marriage itself, that matter. Your spouse’s past credit mistakes won’t automatically affect your score, and vice versa. Understanding this distinction can help couples manage finances more confidently. [Source: Experian]
12. Using Debit Cards Builds Credit
Many people think that using a debit card regularly helps build their credit history. However, debit card usage isn’t reported to credit bureaus—only credit accounts like loans and credit cards are. No matter how often you use your debit card, it won’t impact your credit score. To establish or improve credit, you need to use and manage actual credit products responsibly. Don’t rely on your debit card for credit building—it simply won’t help. [Source: Investopedia]
13. Paying Utilities Always Builds Credit
A widespread myth is that paying your utility bills on time always boosts your credit score. In most cases, utility payments aren’t reported to credit bureaus unless your account becomes delinquent or goes to collections. While some new services now offer ways to include positive utility payment history in your credit report, this isn’t automatic or standard practice. Relying on utility payments alone won’t typically build your credit—be proactive if you want them to count. [Source: CNBC]
14. Credit Repair Companies Can Instantly Fix Your Score
It’s tempting to believe that credit repair companies can magically erase your credit problems overnight. However, no legitimate company can remove accurate negative information from your credit report instantly. Credit repair is a process—it involves disputing errors and waiting for accurate information to age off your report. Be wary of promises that sound too good to be true; lasting improvement requires time, diligence, and responsible credit behavior. [Source: FTC]
15. Having No Debt Means a Great Credit Score
It’s easy to assume that having no debt equals an excellent credit score, but that’s not necessarily true. If you have little or no credit history—sometimes called a “thin file”—lenders have no track record to evaluate your borrowing habits. Responsible use of credit is what lenders want to see. Without any active credit accounts, you might actually struggle to achieve a high score or qualify for loans. Building credit requires some borrowing, not just avoiding debt altogether. [Source: Forbes]
16. Paying More Than the Minimum Boosts Your Score
Many believe that paying more than the minimum on credit cards directly boosts their credit score. While larger payments help you pay off debt faster and save on interest, your score is mostly influenced by on-time payments and maintaining a low credit utilization ratio. The actual amount paid above the minimum doesn’t factor into your score calculations. Focus on paying on time and keeping balances low for the biggest positive impact. [Source: NerdWallet]
17. Your Credit Score Reflects Your Overall Wealth
A persistent myth is that credit scores measure your total wealth or financial status. In reality, a credit score only reflects your creditworthiness—how reliably you manage borrowed money. It’s entirely possible for someone with a high income or significant assets to have a low credit score if they have poor credit habits. Conversely, people with modest means can achieve excellent scores by managing credit responsibly. Your net worth and credit score are completely separate financial indicators. [Source: Money]
18. You Can’t Get a Loan with a Low Credit Score
It’s a myth that having a low credit score automatically disqualifies you from getting a loan. While a lower score can make borrowing more difficult, there are still loan options available—usually with higher interest rates or stricter repayment terms. Shopping around can help you find the best possible rates, even if your score isn’t ideal. Taking steps to improve your credit over time will open the door to better offers and more favorable loan conditions in the future. [Source: Bankrate]
19. Credit Bureaus Decide Whether You Get Credit
Many people believe that credit bureaus determine your loan approvals, but that’s not the case. Credit bureaus—like Equifax, Experian, and TransUnion—only collect, store, and report your credit information. It’s the lenders who evaluate your credit report and score to decide whether to approve your application. The bureaus themselves have no say in the decision-making process; they simply provide the data lenders use. Understanding this distinction can help you focus your efforts where they matter most. [Source: Equifax]
20. All Negative Information Disappears After Seven Years
It’s widely believed that all negative information vanishes from your credit report after seven years. While most negative marks—like late payments or collections—do drop off after that time frame, some records, such as bankruptcies, can remain for up to ten years or more. On the flip side, positive accounts and responsible repayment history may stay on your report even longer. Knowing these timelines helps you better understand how your credit history is built and maintained. [Source: CFPB]
21. Hard Inquiries Destroy Your Credit
A common fear is that hard inquiries will drastically hurt your credit score. In reality, hard inquiries—such as when you apply for new credit—usually cause only a small, temporary dip in your score. Unless you accumulate a large number of inquiries in a short period, the impact is minimal and fades over time. Responsible applications won’t devastate your credit. Don’t let this myth stop you from shopping for the best loan or credit card offers when needed. [Source: Experian]
22. Using All Available Credit Is a Good Sign
Some believe that using all of your available credit proves you can handle higher limits, but this actually signals financial stress to lenders. Maxing out your cards drastically increases your credit utilization ratio, which is a major factor in credit score calculations. High utilization harms your score and can make you appear overextended. Experts recommend keeping your credit utilization below 30% for the healthiest impact. Using credit responsibly and maintaining plenty of available credit is the real sign of financial strength. [Source: Investopedia]
23. Student Loans Don’t Affect Credit
It’s a misconception that student loans have no impact on your credit score. In reality, student loans are reported to credit bureaus just like any other loan. Making on-time payments can help you build a positive credit history, while missed or late payments can cause significant harm to your score. Treat your student loans with the same care and responsibility as any other form of credit. [Source: U.S. Department of Education]
24. Paying Off a Collection Will Remove It from Your Report
Many believe that paying off a collection account will instantly erase it from their credit report. In reality, paying a collection simply updates its status to “paid,” but the account will remain visible on your report until the reporting period—typically up to seven years—expires. While settling collections is still a positive step for your credit health, don’t expect immediate removal from your history. Staying informed helps you set realistic expectations for credit recovery. [Source: Experian]
25. Settling a Debt Is Just as Good as Paying in Full
It’s a common belief that settling a debt is just as positive for your credit as paying the full balance. However, settled debts typically appear on your credit report as “settled” rather than “paid in full.” Future lenders may view settlements less favorably, as it can signal financial difficulty or inability to repay the original amount. Whenever possible, paying debts in full is better for your credit profile and future borrowing opportunities. [Source: Credit Karma]
26. Credit Counseling Hurts Your Score
Many fear that credit counseling will damage their credit score. In truth, enrolling in a credit counseling program is not factored into your credit score calculation. While the agency’s involvement may appear on your credit report, participation itself doesn’t lower your score. In fact, working with a counselor can help you establish better payment habits, which may improve your score over time. Seeking help is often a smart and proactive financial move. [Source: NFCC]
27. One Late Payment Won’t Matter
It’s easy to think that missing just one payment isn’t a big deal, but even a single late payment can have a significant impact on your credit score. This is especially true if you have an otherwise spotless credit history—lenders see prompt payments as a sign of reliability. A late payment can stay on your report for years and cause a noticeable drop in your score. Consistent, on-time payments are essential for maintaining a healthy credit profile. [Source: CNBC]
28. Authorized Users Are Always Safe from Credit Damage
Many assume that authorized users on someone else’s credit card are insulated from negative consequences. However, if the primary account holder misses payments or accumulates high debt, the authorized user’s credit score may also take a hit. Being linked to someone else’s account carries real risks as well as benefits. Always choose accounts and account owners wisely, and monitor shared accounts closely to protect your credit reputation. [Source: Experian]
29. Rent Payments Don’t Count Toward Your Score
It’s often assumed that rent payments have no impact on your credit score. Traditionally, most rent payments aren’t reported to credit bureaus, so they don’t affect your credit history. However, things are changing—some landlords and third-party platforms now offer rent reporting services that can help you build credit with timely payments. If you’re a responsible renter, ask your landlord or search for reporting services to make your rent count toward a stronger credit profile. [Source: Equifax]
30. You Need to Be in Debt to Build Credit
A dangerous myth is that being in debt is necessary to build good credit. In reality, you can establish and grow your credit score simply by using credit cards responsibly—making small purchases and paying them off in full each month. It’s the pattern of timely payments and responsible use that counts, not the amount of debt you carry. Building a strong credit history doesn’t require carrying balances or accruing interest. [Source: U.S. News]
31. All Lenders Report to All Credit Bureaus
A frequent misconception is that every lender reports your activity to all three major credit bureaus—Equifax, Experian, and TransUnion. However, not all lenders report to every bureau, and some may report to only one or two. This leads to differences between your credit reports and can sometimes result in varying scores. It’s wise to check all three reports regularly to get a full picture of your credit standing. [Source: CFPB]
32. Your Credit Score Can Be Fixed Overnight
It’s wishful thinking to believe that your credit score can be repaired instantly. In reality, boosting your score is a gradual process that demands consistent positive credit habits—like timely payments and lowering debt—over months or even years. Promises of overnight fixes are often scams and should be viewed with caution. Lasting improvement comes from patience, discipline, and responsible financial management. Don’t be fooled by shortcuts; real results take time and effort. [Source: FTC]
Conclusion
Credit scores shape countless financial opportunities, yet misunderstandings can cost you dearly. By separating fact from fiction, you empower yourself to make smarter decisions—saving money, reducing stress, and improving your financial future. Ongoing education is your best defense against costly credit myths. Stay curious, review your credit reports regularly, and seek reliable sources for answers. With accurate knowledge and proactive habits, you can avoid unnecessary pitfalls and pave the way to a stronger, healthier financial life.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. For personalized recommendations or credit guidance, please consult a licensed financial professional. Take charge of your financial future by seeking expert support when making important decisions.
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