Banking & Credit

Unveiling the Truth: Credit Score Myths and Facts

Credit score is a critical financial indicator that can influence ability to secure credit, yet misconceptions about credit scores abound
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Your credit score is a critical financial indicator that can influence your ability to secure loans, obtain credit cards, and even impact your housing and job prospects. Yet, misconceptions about credit scores abound. In this article, we will debunk some common credit score myths and reveal the facts behind this crucial financial metric.

Myth 1: Monitoring Your Credit Score Causes It to Decrease

Fact: This is one of the most pervasive myths. When you check your own credit score, it’s considered a soft inquiry or a “soft pull.” Soft inquiries do not affect your credit score in any way. However, when lenders or creditors perform a “hard inquiry” to assess your credit for lending decisions, it can have a minor, temporary impact on your score.

Myth 2: Closing Old Credit Accounts Boosts Your Score

Fact: Closing old credit accounts can, in fact, harm your credit score. Part of your credit score is determined by your credit utilization ratio, which is the amount of credit you’re using compared to your total credit limit. Closing an old account reduces your total credit limit, potentially increasing your utilization ratio and negatively affecting your score.

Myth 3: There Exists Only a Single Credit Score

Fact: There isn’t just one universal credit score. You actually have multiple credit scores, depending on the credit scoring model used by the lender. The most common credit scoring model is FICO, but there are others, such as VantageScore. Each model may weigh factors differently, resulting in slightly different scores.

Myth 4: A Higher Income Means a Higher Credit Score

Fact: Your income is not a direct factor in calculating your credit score. Credit bureaus do not consider your salary when determining your score. However, your income can indirectly affect your creditworthiness if it impacts your ability to manage your debts and make on-time payments.

Myth 5: Paying Off a Debt Removes It from Your Credit Report

Fact: Paid-off debts are not immediately removed from your credit report. They can remain on your report for several years, depending on the type of debt. While they may still be visible, having a history of paying off debts can have a positive impact on your credit score.

Myth 6: It Takes Forever to Improve a Low Credit Score

Fact: While it does take time to rebuild a low credit score, it’s not an indefinite process. Positive changes in your credit behavior, such as paying bills on time and reducing credit card balances, can start improving your score within a few months. Notable enhancements might require a year or longer to become evident.

Myth 7: Bankruptcy Ruins Your Credit Forever

Fact: Bankruptcy is a significant negative event for your credit, but it does not ruin it forever. Bankruptcies remain on your credit report for a set number of years (typically 7 to 10 years, depending on the type of bankruptcy). During that time, it can be challenging to obtain new credit, but it’s not impossible. By practicing prudent financial habits, you have the potential to restore your credit gradually.

Myth 8: You Need to Carry a Balance on Your Credit Card to Build Credit

Fact: You do not need to carry a balance on your credit card to build credit. In fact, it’s a good practice to pay your credit card balances in full each month to avoid interest charges. Making on-time payments and keeping your credit utilization low are the key factors for building and maintaining a healthy credit score.


Understanding the truth about credit scores is crucial for making informed financial decisions. Dispelling these common myths allows you to take control of your credit, work toward improving your score, and ultimately achieve your financial goals.

Keep in mind that responsible financial habits, such as timely payments and prudent credit utilization, are the most effective ways to maintain a strong credit profile.

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