Credit score misinformation is widespread and some of it is genuinely expensive. Acting on false beliefs about how scores work can lead to decisions that hurt rather than help your credit profile. These are six common myths, corrected.
Myth 1: Carrying a Balance Builds Credit
This one is both wrong and costly. The belief is that keeping a small balance demonstrates active credit use, which helps your score. It does not. Credit scoring models look at whether you have open accounts, whether you pay on time, and your utilization ratio, not whether you carry a balance. Paying your balance in full every month establishes the same payment history as carrying a balance, without the interest charges. There is no credit score benefit to carrying a balance and no reason to pay interest to build credit.
Myth 2: Checking Your Credit Score Hurts It
Checking your own credit is a soft inquiry and has zero impact on your credit score. You can check your score daily if you want. The confusion comes from conflating soft pulls with hard pulls, which occur when a lender checks your credit for an application decision. Hard pulls have a small, temporary impact. Soft pulls do not. Monitoring your own credit regularly is a good habit that helps you catch errors and spot identity theft early.
Myth 3: Closing Old Credit Cards Helps Your Score
Closing credit cards almost always hurts your score for two reasons: it eliminates the card’s credit limit from your available credit, increasing your utilization ratio, and it reduces the average age of your credit history. The instinct to close old cards often comes from wanting to simplify. Keep no-fee old cards open. The exception: close a card if it charges a meaningful annual fee and you are extracting no value from it.
Myth 4: You Have Only One Credit Score
You have dozens of credit scores. The three major bureaus each maintain separate reports, and several scoring models can be applied to each. FICO 8, FICO 9, FICO Auto, VantageScore, and others each produce different numbers. Lenders use industry-specific models: auto lenders use FICO Auto scores, mortgage lenders typically use FICO 2/4/5. The score you see on a monitoring app is usually one version and may differ from what a specific lender sees.
Myth 5: Income Affects Your Credit Score
Credit scores contain no income information. They are calculated entirely from what is in your credit report: payment history, balances, account ages, inquiry history, and account types. Income matters to lenders during underwriting, but it has no bearing on the score calculation itself. A person earning $300,000 a year with poor credit habits has a lower score than someone earning $50,000 who manages accounts responsibly.
Myth 6: A Score Below 700 Is Catastrophically Bad
A score below 700 is not great, but it does not put loans or credit out of reach. The 670 to 699 range is good under FICO’s framework, and most loan products are accessible at somewhat higher rates than scores in the 720 to 750 range would receive. The rate difference between 680 and 720 on a car loan might be 1 to 2 percentage points. That is real money and worth working to improve, but it is not catastrophic. Many people with scores in the 660 to 690 range are approved for mortgages, car loans, and credit cards.
The Common Thread
Most of these myths persist because credit scores are invisible infrastructure. They affect your financial life constantly but are not something you interact with daily. The scoring model works on clear rules, and understanding those rules produces better decisions than acting on commonly repeated inaccuracies.
