The Five Biggest Myths About Credit Scores

Credit scores are still among the most misunderstood aspects of personal finance. Even though many people can access free reports and scores, myths persist, leading to costly mistakes. In 2026, as scoring models evolve to incorporate alternative data such as rent and utilities for some loans, it’s more important than ever to know what’s true and what’s false. Here are the five biggest myths that keep misleading borrowers—and the facts that can help you improve or protect your score.

Myth 1: Checking your own credit score hurts it.

This is probably the most common misconception. Many people avoid checking their credit for fear it will lower their score. In reality, when you review your score or report from sources like AnnualCreditReport.com, your bank, Credit Karma, or similar services, it’s a soft inquiry. Soft inquiries do not affect your FICO or VantageScore. Hard inquiries, which happen when you apply for new credit, such as a loan or a card, can temporarily lower your score by a few points. Checking your own credit regularly is a smart practice: it helps you catch errors, fraud, or identity theft early, without incurring any penalties.

Myth 2: You need to carry a balance on credit cards to build or improve your score.

This common myth suggests that paying your card in full every month stops your credit score from growing because lenders want to see you "using" credit. Wrong. Carrying a balance and paying interest doesn’t improve your score—in fact, it can hurt you financially and raise your utilization ratio if balances stay high. FICO and VantageScore favor low credit utilization (ideally under 30%, preferably below 10%). The best strategy: use your cards responsibly, pay the full statement balance by the due date to avoid interest, and keep reported balances low. Paying in full each month shows reliability without extra cost.

Myth 3: Closing old credit cards will boost your score.

People often close unused or paid-off cards, thinking it simplifies their finances or improves their appeal to lenders. Unfortunately, this usually has the opposite effect. Closing accounts lowers your total available credit, which can raise your utilization ratio and decrease your credit score. It also shortens your average credit history, one of the key factors (about 15% in FICO). Older accounts with a positive history strengthen your credit profile. Unless a card has high annual fees or you’re at risk of overspending, it’s best to keep old accounts open. Use them occasionally for small purchases and pay them off to keep them active.

Myth 4: You only have one credit score.

Many believe there’s a single, universal "real" credit score. In reality, you have multiple scores. The three main bureaus (Equifax, Experian, TransUnion) might report slightly different information, causing variations. FICO (used by most lenders) and VantageScore (popular in free tools) use different algorithms, and even within each, versions differ (e.g., FICO 8, FICO 9, industry-specific scores for mortgages or autos). Your score when applying for a home loan could be different from the one shown on a credit monitoring app. Focus on trends across sources instead of obsessing over one number.

Myth 5: Your income directly affects your credit score.

It seems logical that earning more would result in a higher score, but income isn’t included in FICO or VantageScore calculations. Scores depend solely on credit-related data: payment history, amounts owed, length of credit history, new credit, and credit mix. Lenders consider income separately during applications for debt-to-income ratios, but it doesn’t affect the actual three-digit score. High earners with poor habits can have low scores, while modest earners with good payment histories often score well.

Busting these myths empowers better decisions. Focus on on-time payments, low credit utilization, and mindful credit use—these drive real improvement. Monitor your credit regularly (it won’t hurt), pay balances in full, and keep old accounts alive. In 2026, as some models begin weighing alternative positive behaviors, consistent good habits remain the foundation of a strong score.