10 Credit Score Myths Debunked
Misinformation about credit scores is everywhere, and the cost of believing it can be real. Bad advice from well-meaning friends, outdated articles, and social media speculation can lead people to make financial decisions that actively hurt their credit instead of helping it.
At 800 Credit Collective, we believe that accurate knowledge is the most powerful credit-building tool available. Here are 10 of the most common credit score myths, what people get wrong, and what is actually true.
Myth 1: Checking Your Own Credit Hurts Your Score
The Truth: Checking your own credit score or credit report results in a soft inquiry, which has absolutely no impact on your credit score. Only hard inquiries, which occur when a lender reviews your credit after a formal application, can affect your score.
You should be checking your credit regularly. Monitoring your own credit is one of the best habits you can build, and it does not cost you a single point.
Note:Credit Karma provides free weekly credit score updates with no impact on your score. Experian does the same for your Experian FICO Score.
Myth 2: Carrying a Balance on Your Credit Card Builds Credit
The Truth: You do not need to carry a balance from month to month to build credit. Paying your balance in full each month is reported just as favorably as carrying a balance, but without the interest charges.
This myth may have originated from a misunderstanding of how credit card activity is reported. The key is that you use the card and the activity is reported to the bureaus. Whether you pay in full or carry a balance does not affect how the payment is reported, as long as it is on time. Carrying a balance only costs you money in interest.
Myth 3: Income Affects Your Credit Score
The Truth: Your income is not a factor in your credit score calculation. FICO scores are based entirely on the information in your credit report, which does not include your salary, employment status, or net worth.
However, income does matter when lenders calculate your debt-to-income ratio (DTI) for loan approval purposes. A high income does not automatically translate to a high credit score. Someone earning $250,000 a year with poor payment habits can have a lower score than someone earning $40,000 a year with a clean credit history.
Myth 4: Closing Old Credit Cards Improves Your Score
The Truth: Closing old credit cards can actually hurt your credit score in two ways. First, it reduces your total available credit, which raises your credit utilization ratio. Second, if the card being closed is one of your older accounts, it can shorten your average credit history.
Unless a card has a high annual fee that outweighs its benefits, keeping it open and occasionally using it for small purchases is generally the better strategy.
Myth 5: Debit Cards Help Build Credit
The Truth: Debit cards have no connection to your credit report or credit score. When you use a debit card, you are spending money directly from your bank account. There is no borrowing involved, so there is nothing to report to the credit bureaus.
To build credit, you need a product that reports to the bureaus, such as a credit card, an installment loan, or a credit builder account.
Myth 6: You Only Have One Credit Score
The Truth: You actually have dozens of credit scores. Each of the three major bureaus (Equifax, Experian, and TransUnion) generates its own score based on the data it has on file for you. Additionally, there are multiple versions of the FICO Score (FICO 8, FICO 9, FICO 10, and industry-specific versions for mortgages and auto loans) as well as the VantageScore model.
The score you see on a free credit monitoring app may differ from the score a lender pulls when you apply for a loan. This is normal, and the differences are typically minor unless there is a significant data discrepancy between bureaus.
Note:myFICO shows you the specific FICO Score versions that mortgage lenders, auto lenders, and credit card issuers actually use, which provides a more accurate picture than a generic score.
Myth 7: Paying Off a Debt in Collections Removes It From Your Report
The Truth: Paying a collection account changes its status on your report from "unpaid" to "paid," but it does not automatically remove the account from your credit history. Collections can remain on your report for up to seven years from the date of the original delinquency.
However, there are strategies for handling collections, including pay-for-delete agreements and goodwill deletion requests, that can sometimes result in removal. These require direct negotiation with the collection agency and are not guaranteed, but they are worth pursuing.
We cover this in detail in our dedicated post on handling collections.
Myth 8: A Divorce Automatically Separates Joint Accounts
The Truth: A divorce decree does not change the terms of your credit accounts. If you and a former spouse have joint accounts, both parties remain legally responsible for those balances regardless of what the divorce agreement says. If your ex-spouse stops paying a joint account, the late payments will appear on your credit report as well.
After a separation, it is critical to either pay off and close joint accounts or have them transferred to individual accounts as quickly as possible.
Myth 9: You Need to Be in Debt to Have a Good Credit Score
The Truth: You do not need to carry debt to have an excellent credit score. What you need is a history of borrowing and repaying responsibly. This means using credit accounts regularly and paying them on time, not maintaining ongoing balances.
Many people with 800-plus credit scores carry zero balances from month to month on their credit cards. They use their cards for everyday purchases and pay the statement balance in full each billing cycle.
Myth 10: Credit Repair Is Only for People with Bad Credit
The Truth: Credit repair and credit monitoring benefit everyone, not just those recovering from financial hardship. Errors on credit reports are more common than most people realize. The Federal Trade Commission has estimated that approximately one in five consumers has at least one error on a credit report that could affect their score.
Even a person with a 760 credit score may have inaccurate information on file that is holding them back from 800 or above. Regular review and proactive dispute of errors is a strategy for everyone, regardless of where their score currently stands.
Note:IdentityIQ offers three-bureau credit monitoring with identity theft protection, giving you complete visibility across all three reports so errors do not go unnoticed.
Final Thoughts
Credit myths are costly when people act on them. Making decisions based on misinformation can lead to closed accounts, unnecessary inquiries, missed opportunities to build credit, and real financial consequences.
The best investment you can make in your credit health is accurate information combined with consistent, deliberate action. At 800 Credit Collective, we are committed to giving you both.
If you have questions about your specific credit situation, our team is here to help.
