7 Common Credit Score Myths That Keep Beginners Stuck (And What’s Actually True)

Why Credit Score Myths Are So Persistent

If you’re just starting your money journey, these myths can:

• Make you afraid to use credit at all, or
• Push you into using credit in harmful ways

Let’s break down seven common credit score myths, explain what’s actually true, and give clear actions you can take.

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Myth #1: “Checking Your Own Credit Score Will Hurt It”

This one scares a lot of beginners into flying blind.

The Truth

There are two main types of credit checks:

• Hard inquiries (when a lender checks your credit because you apply for credit) – can lower your score a bit
• Soft inquiries (when you check your own score or a lender does a pre-approval) – do not affect your score

When you:

• Check your score on a bank app
• Use credit monitoring services
• Pull your own report from AnnualCreditReport.com

…those are soft inquiries. They won’t hurt your score.

Action Step

• Get comfortable checking your own credit monthly or quarterly. Treat it like checking your weight or blood pressure: just data, no shame.

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Myth #2: “You Have to Carry a Balance to Build Credit”

You might have heard: “Leave a little on your card each month—that builds credit.”

The Truth

You build credit by using credit and paying on time, not by paying interest.

If your statement balance is $300 and you pay the full $300 by the due date:

• You still show on-time payment history
• The card still reports usage and repayment
• You avoid paying any interest

Carrying a balance from month to month only

• Costs you extra interest
• Can increase your utilization (which may lower your score)

Action Step

• Use your card for small, planned purchases (like gas or a streaming service)
• Pay the full statement balance each month if you can

You’ll still build credit—without unnecessary interest.

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Myth #3: “Closing Old Credit Cards Will Boost Your Score”

Many people close old cards to feel more “responsible” or simplified.

The Truth

Closing a credit card can actually hurt your score in two ways:

1. It can reduce your total available credit, increasing your utilization.
2. It can reduce your average age of accounts, which is a factor in your score.

Example:

Before closing:

• Card A limit: $1,000, balance: $200
• Card B limit: $2,000, balance: $300
• Total limit: $3,000; total balance: $500 → Utilization ≈ 16.7%

You close Card B (limit $2,000):

• Total limit: now $1,000; total balance: still $500 → Utilization = 50%

Your utilization jumps from 16.7% to 50% without adding any new debt.

Action Step

• If an old card has no annual fee, consider keeping it open, using it occasionally, and paying it off monthly.
• If a card has a high annual fee and you don’t use it, you may decide to close it—but be aware of the potential short-term score impact.

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Myth #4: “All Debt Is Bad for Your Credit”

You might think having any loans is automatically bad.

The Truth

Credit scores are about how you manage debt, not whether you have zero debt.

In fact, having no credit accounts at all can make it:

• Harder to get a score in the first place
• Harder for lenders to judge your risk

Healthy use of credit can help you:

• An affordable car loan, paid on time, builds a strong record
• A credit card used lightly and paid in full shows responsibility

The problem is unmanageable debt, not all debt.

Action Step

• Focus on borrowing only what you can realistically afford to repay
• Use credit tools (like cards or small loans) intentionally, not impulsively

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Myth #5: “Paying Off a Collection Will Remove It from Your Credit Report”

Many people are shocked when they pay off a collection and it still appears.

The Truth

Paying off a collection usually updates the status to “paid” or “paid, settled”, but:

• The account itself often stays on your report for up to 7 years from the original delinquency date

However, paying a collection can still help you:

• Some credit scoring models ignore paid collections entirely
• Lenders often look more favorably at paid vs. unpaid collections

Action Step

• When paying a collection, ask the collector what they will report (in writing if possible)
• Don’t expect instant removal, but do know that paid is better than unpaid for future lending decisions

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Myth #6: “Your Income Directly Determines Your Credit Score”

People often assume a higher salary = higher credit score.

The Truth

Your income is not part of your credit score formula.

Your score looks at:

• Payment history
• Utilization
• Length of history
• New credit inquiries
• Credit mix

Income matters to lenders when they decide how much to lend you, but it doesn’t directly change your score.

That said, income can indirectly affect your score because:

• Higher income may make it easier to pay on time and keep balances low
• Lower income may make it harder to keep up with payments

Action Step

• Focus on behaviors you control (payments, balances, applications), regardless of income
• If your income rises, consider using that as an opportunity to pay down debt and strengthen your profile

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Myth #7: “Once Your Credit Is Bad, It’s Ruined Forever”

This is one of the most discouraging myths—and it’s simply not true.

The Truth

Credit scores are designed to change over time.

Negative items do stay for years, but:

• Their impact fades as they get older
• New positive history can eventually outweigh old mistakes

Example timeline for someone starting at a 560 score:

• Months 1–3: All payments on time, utilization drops under 50% → score may move into high 500s/low 600s
• Months 4–9: Some collections paid, utilization below 30% → score may move into mid–600s
• Months 10–18: Strong payment history, aging negatives → many people see scores in high 600s or low 700s

Everyone’s journey is different, but improvement is absolutely possible.

Action Step

• Treat your current score as starting data, not a life sentence
• Pick one or two habits to focus on this month (e.g., on-time payments + lowering one balance)

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Turning Knowledge into Action

Knowing the truth behind these myths gives you power.

To recap, remember:

Pick one myth you believed and take a small action today to move in the right direction. Your credit story is still being written—and you’re the author.