Hey there! If you’ve ever felt confused about credit scores, you’re definitely not alone. There’s a ton of misinformation floating around, and it can be tough to know what’s true and what’s just noise. So, let’s break it down together and tackle five of the most common myths about credit scores, one by one.
Myth 1: Checking Your Credit Score Hurts Your Score
Ever heard someone say that checking your own credit score will lower it? Nope, not true! When you check your score, it’s called a “soft inquiry,” and it has zero impact on your score. Think of it like peeking at your test results before showing them to the teacher. On the other hand, a “hard inquiry”—like when you apply for a loan—can affect your score, but only slightly and temporarily.
Key takeaway: Keep an eye on your score regularly. Staying informed is empowering, and it won’t cost you any points!
Myth 2: Closing Old Accounts Will Boost Your Score
You might think closing old accounts is like tidying up your credit history, but it actually works against you. Your credit score loves long credit histories—kind of like a friendship where the longer you’ve known each other, the stronger the trust.
Example: If you close a credit card you’ve had for 10 years, it could shorten your credit history and dent your score.
Key takeaway: Keep those older accounts open, especially if they’re in good standing.
Myth 3: You Only Have One Credit Score
Surprise! You actually have multiple credit scores. It’s like having different report cards from different teachers. The three major credit bureaus—Equifax, Experian, and TransUnion—each keep their own version. Plus, they use different scoring models like FICO and VantageScore.
Why does this happen? Some lenders report to one bureau, some to all three, and each scoring model weighs factors a bit differently.
Key takeaway: Check your reports from all three bureaus to get the full picture.
Myth 4: Paying Off Debt Immediately Skyrockets Your Score
While paying off debt is awesome (seriously, celebrate that win!), it doesn’t always mean your score will shoot up instantly. Your score factors in several things, like:
- Payment history: Do you pay on time?
- Credit utilization: How much credit are you using versus your limit?
If you’ve paid off a balance, it might take a billing cycle or two for those updates to reflect in your score.
Key takeaway: Paying off debt is a fantastic move for your financial health, even if the score improvement takes a bit of time.
Myth 5: You Need to Carry a Balance to Build Credit
Nope! This myth has tripped up so many people. Carrying a balance (especially one that racks up interest) isn’t required to build credit.
What actually helps? Using your credit card for small purchases and paying the full balance off every month shows lenders you’re responsible without costing you extra in interest.
Key takeaway: Pay in full, on time, every time. Your wallet will thank you.
Final Tips for Keeping Your Credit Score Healthy
Now that we’ve busted these myths, here’s how you can keep your credit score shining:
- Pay bills on time. Seriously, this is the MVP of good credit habits.
- Keep your credit utilization low. Aim for under 30% of your credit limit.
- Check your credit reports regularly. Look for errors and dispute them if necessary.
- Avoid too many hard inquiries. Only apply for credit when you really need it.
- Maintain older accounts. That long history works in your favor.
Wrapping It Up
Credit scores don’t have to be confusing or stressful. By understanding what really affects your score—and steering clear of these common myths—you’ll be in a better position to make smart financial moves. Have you ever fallen for one of these myths? Share your experience and let’s keep the conversation going!