10 Credit Score Myths That Could Be Costing You Money

Credit score myths are everywhere, and believing them can cost you money and opportunities. Let's separate fact from fiction.

Myth 1: Checking Your Credit Hurts Your Score

Truth: Checking your own credit is a soft inquiry and has zero impact on your score. Check as often as you like.

Myth 2: Carrying a Balance Builds Credit

Truth: This myth costs people money in interest. Pay your balance in full each month. You build credit by using your card and paying on time, not by paying interest.

Myth 3: Closing Old Cards Helps Your Score

Truth: Closing cards usually hurts your score by reducing your credit history length and increasing your utilization ratio. Keep old cards open.

Myth 4: You Only Have One Credit Score

Truth: You have dozens of credit scores from different scoring models and bureaus. FICO alone has multiple versions.

Myth 5: Income Affects Your Credit Score

Truth: Income is not a factor in credit score calculations. You can have a high income and terrible credit, or modest income with excellent credit.

Myth 6: Married Couples Share Credit Scores

Truth: Each person has their own individual credit score. Marriage doesn't merge your credit files.

Myth 7: Paying Off a Collection Removes It

Truth: Paid collections can still remain on your report for 7 years. However, newer FICO models (FICO 9) ignore paid collections.

Myth 8: All Debt Is Bad for Credit

Truth: Responsibly managed debt actually helps build credit. Having no credit history can hurt you.

Myth 9: Credit Repair Is a Scam

Truth: Credit repair is legal and can be effective for removing inaccurate information. The key is working with legitimate companies.

Myth 10: Disputing Items Always Fails

Truth: Disputes succeed when information is inaccurate, incomplete, or unverifiable. Many people successfully dispute errors.

The Bottom Line

Making decisions based on myths can hurt your credit and your wallet. Always verify credit advice with reliable sources, and don't let misconceptions guide your financial decisions.