7 Common Credit Myths Debunked

7 Common Credit Myths Debunked

Table of Contents


1. Myth: Checking Your Own Credit Report Will Hurt Your Score

One of the most persistent misconceptions about credit is that when you check your own credit report, it negatively impacts your credit score. This is categorically false. When you access your own credit report, it’s considered a soft inquiry and has no effect on your score whatsoever. Soft inquiries can include checks by potential employers or rental background checks, apart from your personal review. It’s essential to regularly monitor your credit to be aware of and address any inaccuracies or fraudulent activities promptly.

2. Myth: You Only Have One Credit Score

Many consumers labor under the belief that they possess a single credit score. In reality, each person can have multiple scores. This is because there are several credit scoring models in use, like FICO and VantageScore, each with different versions and criteria for evaluation. Furthermore, the three major credit bureaus—Equifax, Experian, and TransUnion—each have their own data, which might result in slight variations in your scores. It’s crucial to understand that lenders may use different scores for different types of credit applications.

3. Myth: Carrying a Credit Card Balance Boosts Your Credit Score

This myth might lead to unnecessarily paying interest. Some believe maintaining a balance on credit cards is beneficial for their credit score. While responsible credit card use is indeed a factor in building credit, carrying a balance is not a requirement for a good score. Paying off your balance in full each month can avoid interest charges and help maintain a low credit utilization ratio, which is favorable for your score.

4. Myth: Closing Old Credit Cards Is Good for Your Credit Health

Many people mistakenly think that closing old or unused credit cards is a positive step for their credit health. However, this can actually have a detrimental effect. Part of your credit score is determined by the length of your credit history and your credit utilization ratio. Closing old accounts can shorten your credit history and increase your utilization ratio if you carry balances on other cards. It’s often better to keep the old accounts open, provided they’re not costing you money in annual fees.

5. Myth: You Need to Be in Debt to Have a Good Credit Score

The idea that you must carry debt to achieve a good credit score is another widespread myth. In fact, you can build credit by using credit cards for purchases and paying the balance in full every month. This practice shows lenders that you can responsibly manage debt without actually incurring it.

6. Myth: All Debts Are Equal in the Eyes of Your Credit Score

Not all debts are created equal when it comes to their impact on your credit score. Different types of debt, such as revolving debt (like credit card debt) and installment debt (like a mortgage or auto loan), can affect your score in different ways. High amounts of revolving debt can be seen as riskier and may lower your score more significantly than installment debt, which is typically associated with more stable, planned payments.

7. Myth: Your Salary Influences Your Credit Score

Your salary or income does not directly affect your credit score. Credit scores are calculated based on your credit history, not your personal financial status. However, lenders may consider your income when making decisions about extending credit, as it can indicate your ability to repay a loan.


Understanding credit and debunking these myths is crucial for maintaining financial health and making informed decisions. By recognizing and dismissing these common credit myths, you can take a more proactive and knowledgeable approach to managing your credit score. Remember, the best practices for good credit health include regularly reviewing credit reports, making timely payments, and managing debt wisely.