Credit Myths: Common Misconceptions Debunked
Don’t Let Credit Myths Hurt Your Score
Credit can be confusing—especially with all the misinformation floating around. Many people fall for common credit myths that can actually hurt their credit score or delay financial progress. Understanding the truth about how credit works is key to building and maintaining a strong financial foundation. Let’s clear up some of the most common credit myths and explain what’s actually true.
You Need to Carry a Balance to Build Credit
This is one of the most common credit myths—and it’s false.
- You do not need to carry a balance or pay interest to build credit
- What matters is that you use your card and pay it off on time
- Paying your full balance each month is better for your score and your wallet
Checking Your Own Credit Score Hurts It
Many people avoid checking their score out of fear it will drop.
- Checking your own credit is a soft inquiry and does not affect your credit score
- Only hard inquiries (like applying for a loan or credit card) may cause a small dip
- Regularly reviewing your credit report helps you spot errors and monitor progress
Closing a Credit Card Improves Your Score
It may seem smart to close old cards, but this credit myth can backfire.
- Closing a card reduces your total available credit, which may raise your credit utilization ratio
- It can also shorten your credit history, especially if it’s an older account
- Unless the card has high fees or you can’t manage it, it’s often better to keep it open
Income Affects Your Credit Score
This is another widespread credit myth. Your income is important to lenders—but it’s not included in your credit score.
- Credit scores are based on your credit report, not your paycheck
- Lenders may use income to decide how much to lend, but it doesn’t directly affect your score
- Focus on paying on time and keeping balances low to improve your score
Paying Off a Debt Erases It from Your Report
While paying off a debt is great, it doesn’t make it disappear instantly.
- Paid debts still appear on your credit report, but they are marked as paid
- Positive accounts stay on your report for up to 10 years
- Negative items (like collections) stay for up to 7 years, even if paid
You Only Have One Credit Score
Many people think there’s just one credit score—but that’s not true.
- You can have dozens of scores depending on the scoring model (FICO, VantageScore, etc.)
- Lenders may use different versions depending on what you’re applying for
- Your score might also vary slightly between credit bureaus (Equifax, Experian, TransUnion)
Debit Cards Help Build Credit
Using a debit card is a good way to manage money—but it doesn’t help your credit.
- Debit cards use your own money and don’t involve borrowing, so they aren’t reported to credit bureaus
- To build credit, use a credit card, credit builder loan, or other reporting credit product
Know the Facts, Build Smarter
Credit myths can lead to mistakes that are easy to avoid once you understand the truth. Building good credit comes down to simple habits: pay on time, keep balances low, monitor your report, and avoid unnecessary applications. Now that you know what’s fact and what’s fiction, you can move forward with confidence—and better credit.
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