7 Credit Score Myths That Are Costing You Money
Carrying a balance helps your score? Closing old cards is smart? Wrong. We debunk the most expensive credit score myths with data.
Stop Believing These Credit Score Myths
Your credit score affects your interest rates, insurance premiums, and even job applications. Yet most people operate on myths that actively hurt their score. Let's fix that.
Myth 1: Carrying a Balance Improves Your Score
Reality: This is the most expensive myth in personal finance. You never need to carry a balance. Pay your statement in full every month. The credit bureaus see that you used credit and paid it back — that's what matters.
Myth 2: Closing Old Cards Helps
Reality: Closing old accounts reduces your total available credit and shortens your credit history — two factors that can lower your score. Keep old cards open, even if you rarely use them. Put a small recurring charge on them to keep them active.
Myth 3: Checking Your Score Hurts It
Reality: Checking your own score is a "soft inquiry" — it has zero impact. Only "hard inquiries" from lenders affect your score, and even those only matter for about 12 months.
Myth 4: You Only Have One Credit Score
Reality: You have dozens. FICO alone has multiple versions, and VantageScore is a separate model entirely. Different lenders use different scores. Don't obsess over a single number.
Myth 5: Paying Off Collections Removes Them
Reality: Paying a collection doesn't automatically remove it from your report. It changes from "unpaid" to "paid" but remains for 7 years. Negotiate a "pay-for-delete" agreement if possible.
Myth 6: Income Affects Your Credit Score
Reality: Income is not a factor in any credit scoring model. A minimum-wage worker who pays bills on time can have a higher score than a CEO who misses payments.
Myth 7: You Need Debt to Build Credit
Reality: You need credit activity, not debt. Using a credit card for regular purchases and paying it off monthly builds excellent credit without costing you a penny in interest.
Take control of your financial health. Start your debt-free journey today.