Your credit score is one of the most misunderstood aspects of personal finance. Most consumers feel they know how the credit score process works, however, a ton of myths persist—resulting in confusion, poor financial choices, and lost chances.

One important aspect that lenders look at when determining if they want to approve your loan, what interest rates you will get, and even if you qualify to rent and/or own a home, is your credit score. Well then how do you know what is true with so many misconceptions?

We will set the record straight when it comes to some of the biggest credit score myths out there, so you can lay the groundwork to support a healthy financial life.

🔍 What Is a Credit Score?

Now before getting into the myths, we have to start from the beginning.

A credit score is a 3-digit-number that gives lenders an idea of your ability to repay debts on time, so a credit score shows how good you are at repaying money that you borrow. This score is used by lenders, banks, and credit card companies to decide whether or not to give you credit, and under what conditions.

Credit scores are generally between 300 and 850. The higher your score, the higher the chances that you will be qualified for loans with low interest rates and on-gos with favorable conditions. The most widely used credit scoring models come from FICO and VantageScore.

The following are common myths about credit that you should quit believing.

Having learned what a credit score is, let’s debunk some of the more prevalent fallacies.

Debunking Myths About Credit Scores

Myth 1: When You Check Your Credit Score, You Ruin It

Truth: Your credit score is not affected by you checking it.

There are so many things that people think will lower their credit score including checking their credit report. This is only the case, though, when it comes to hard inquiries (ones that happen whenever lenders look at your credit because you have applied for a loan or a credit card).

A request of this nature is called a soft inquiry and does not affect your score. In fact, getting a copy of your credit report regularly lets you catch all these mistakes early, and know your financial status.

☠️ Myth 2: Closing Credit Cards Will Help Your Credit Score

Truth: One of the things that can lower your credit score is to close a credit card.

It can be tempting to close unused credit cards, but doing so is not a great idea because it will negatively affect your credit utilization rate — a factor that weighs heavily into your overall credit score. This compares your current credit utilization to your total credit available to you.

❌ Myth 3: Carrying a Balance is Required to Build Credit

Truth: Keeping a balance is not helpful to your score—in fact it hurts it.

Paying Off Your Credit Card Balance In Full Every Month Is The Best Way To Build Credit. An unpaid balance only means you are being charged interest — it will not do anything for your score.

Responsible credit use is best demonstrated through timely payments and low utilization.

MYTH #4: All debt is bad for your credit.

Truth: Some debt is good and actually can boost your credit.

There are two types of debt:

Good Debt: Mortgages, student loans and business loans are tend to turn into good debt and improve your credit score if you manage them well.
Harmful Debt: This is another way credit card debt is harmful to your score; if it is charged and sustained at high-interest, it will affect your results, as it is advisable to pay off this debt.

A good combination of American credit (installment loans like a mortgage and revolving credit like credit cards) will improve your score.

MYTH 5: Income has an influence over your credit score❌

Truth: Your credit score has nothing to do with your income.

Though lenders may use your income to help determine if they will make you a loan, your credit score does not include your income; it is based solely on your credit habits. Here are some factors that impact your score:

Payment history
Credit utilization
Length of credit history
Types of credit used
Recent credit inquiries
How much you earn is not included in the scoring formula.

Myth 6: Pay Off Debt to Immediately Raise Your Score 🙅‍♀️

Truth: Paying off debt can make sense in the long-term way and help improve your credit score, but it may not be instantaneous.

Reducing your debt is good for your credit, but your score will only change relative to how quickly the credit bureaus refresh your report. Your credit score might not reflect your improvement for weeks or months.

With that being said, a score will always go up eventually if you pay your bills on time and lower your credit utilization.

Myth 7: There Is only One Score You Have

Truth: You have more than one score

Credit scoring models and credit bureaus can create slightly different scores depending the data they pull from. So for example your FICO score can differ from your VantageScore and then they can also differ depending on which credit bureau Equifax, Experian or TransUnion will give the report.

Depending on the type of credit you are seeking–mortgage, car loan, or credit card, lenders may be using different versions of your score.

Myth 8 – Bad Credit is Forever

Fact : You did not have ti have permanent bad credit.

Although the negative marks such as late payments or defaults, or even bankruptcies are painful for your score, they are not permanent. The majority of negative items will remain on your credit report for 7 years, whilst bankruptcies will last for up to 10 years.

If you use credit responsibly—by making payments on time, paying down debt, and using credit responsibly in the first place—your credit will eventually recover.

Myth 9: If You Never Borrow Money, You Never Need to Care About Your Score

Truth: A good credit score influences more than just loans

Your credit score can affect other aspects of your like, even if you never plan to apply for a credit card. Landlords, insurance companies, and sometimes even employers will look at your credit score and judge your level of responsibility.

A good credit score helps you find the right rental agreements, lower insurance premiums, and even job offers.

Myth 10: All You Need to Do to Raise Your Score Is Pay Your Bills on Time

Truth: That said, although timely payments are necessary, they aren’t everything.

While your credit score is primarily based on your payment history, it is not the only factor that matters. Additional aspects that influence your score are:

Credit Utilization: The percentage of your available credit that is currently being used.
Credit History Length: The amount of time your credit accounts have been open.
CREDIT MIX: A combination of credit cards, installment loans and mortgage loans.
Recent Credit Applications: If you have applied for additional credit within the last few months it can bring your score down.

✅ Tips for Improving and Maintaining a Good Credit Score

Having debunked some credit score myths, here are a few straightforward actions you can take to improve and maintain a good credit score:

Pay Bills on Time Timely payments are the most important factor in creating a good credit history.
Maintain Low Credit Utilization: Keep your credit utilization below 30% of the available credit.
Get a Variety of Credit Utilizations: Option in several credit history accounts sustainably.
Minimize Hard Pulls: Apply for new credit only when you actually need it.
Always Monitor Your Credit Report: Check your report for mistakes or bad action.

❓ FAQs Relating to Credit Scores

Checking my credit score – how often?

At a minimum, you should take a look at your credit score every few months to make sure everything is accurate and to be aware of your financial situation.

Can I correct mistakes in my credit report?

Yes. If you find any issue, you will have to contact the credit bureau and dispute it. They must investigate and remedy any inaccuracies.

What is a good credit score?

Typically if your credit score is 700 or above, it is considered good, and anything 800 or above is excellent.

Will a debit card build credit?

Since there is no money being borrowed, debit card usage does not affect your credit score, no.

Time required to build bad credit back up

How long it takes to repair credits really does depend on your habits, however, with diligent work, massive gains can be achieved in 6-12 months.