Molly Cyrus
Introduction
Your credit score is one of the most critical numbers in your financial life. It affects your ability to get approved for loans, secure lower interest rates, rent an apartment, and even land certain jobs. Despite its importance, there’s still a lot of confusion and misinformation surrounding credit scores. Myths and half-truths often get passed around, leading people to make poor financial decisions based on false assumptions.
Believing the wrong information about how credit scores work can prevent you from improving your financial health. It can also leave you unnecessarily worried or cause you to miss out on opportunities to build better credit. In this article, we’ll break down some of the most common credit score myths that people continue to believe—and explain the real facts behind them.
By clearing up these misconceptions, you’ll be better equipped to manage your credit wisely, avoid costly mistakes, and work toward a stronger financial future.
Checking Your Credit Score Will Hurt It
One of the most persistent credit score myths is the belief that checking your own credit score will lower it. This false idea discourages people from regularly monitoring their credit, which is actually a crucial part of good financial hygiene.
The truth is, there are two types of credit checks: hard inquiries and soft inquiries. A hard inquiry happens when a lender checks your credit report as part of a decision-making process, like when you apply for a credit card, mortgage, or car loan. These hard inquiries can slightly impact your credit score, usually by a few points, and they typically stay on your report for about two years.
In contrast, a soft inquiry occurs when you check your own credit or when companies run background checks for things like pre-approval offers. Soft inquiries do not affect your credit score at all.
So, if you’re simply checking your score through a reputable service like Credit Karma, Experian, or directly through your credit card issuer, you don’t need to worry about damage to your score. In fact, reviewing your credit score regularly is encouraged. It helps you track progress, identify any unusual activity, and spot errors on your credit report that could be unfairly dragging your score down.
Bottom line: Monitoring your credit is a smart and safe habit. You can and should do it frequently.
Carrying a Balance Improves Your Credit Score
Another widespread credit myth is that you need to carry a balance on your credit card to improve your credit score. Many people believe that leaving a balance and paying interest helps build creditworthiness. This is not only false—it’s an expensive misunderstanding.
Credit scores are influenced by several factors, with credit utilization being one of the most important. Credit utilization is the ratio of your current credit card balances to your total credit limit. For example, if you have a $10,000 limit across all your credit cards and you owe $3,000, your utilization rate is 30%. Ideally, you want to keep your utilization under 30%, and even better, under 10% for the highest scores.
Carrying a balance isn’t what improves your score—it’s showing that you can use credit responsibly and pay it off on time. The best strategy is to pay your statement balance in full each month before the due date. This way, you avoid interest charges while still benefiting from your credit card usage on your report.
Credit card companies might report your balance at the end of your billing cycle, so even if you pay off your card monthly, your credit report might still show a balance. That’s okay—what matters is that you’re not revolving debt and paying unnecessary interest.
So no, you don’t have to keep a balance to build credit. That’s just giving your money away in interest. Use your cards, pay them off, and your credit will benefit without costing you extra.
Closing Old Credit Cards Will Boost Your Score
It’s a common belief that closing old or unused credit cards is good for your credit score. While it might seem logical to close accounts you don’t use, especially if you want to simplify your finances or avoid the temptation to overspend, this move can actually hurt your credit more than help it.
Here’s why: your credit score considers both the length of your credit history and your credit utilization ratio. When you close an old account, you reduce your total available credit. If you carry balances on other cards, your utilization ratio increases—potentially lowering your score.
Also, closing your oldest card could shorten the average age of your accounts, which is another factor that contributes to your credit score. The longer your credit history, the better it is for your score. Lenders like to see a track record of responsible credit use over time.
That said, there are some situations where it might make sense to close an account. If a card has a high annual fee and no longer provides value, or if you’re concerned about fraud and don’t want the card open anymore, closing it might be worth it—but you should weigh the pros and cons carefully.
If you want to keep the benefits of an old account but aren’t using it, consider using it for a small recurring payment like a streaming subscription and setting up auto-pay. This keeps the card active and positively contributing to your score without much effort.
In summary, keeping old accounts open is usually better for your credit than closing them, especially if they don’t carry fees and are in good standing.
Conclusion
Credit scores can feel mysterious and intimidating, especially with so many myths clouding the truth. But understanding how your credit score really works—and separating fact from fiction—can give you the power to make smarter financial choices.
Remember that checking your own credit is not harmful, and in fact, it’s a responsible habit. Carrying a balance on your credit cards isn’t helping your score—it’s just costing you money. And while it might seem like closing old credit cards is a tidy way to manage your finances, it could actually have a negative impact on your score due to its effects on credit utilization and credit history.
At the end of the day, your credit score reflects how well you manage borrowed money over time. By making payments on time, keeping your balances low, maintaining long-standing accounts, and limiting unnecessary credit inquiries, you’ll be well on your way to a healthy credit profile.
Don’t let myths and misinformation steer your financial future. By sticking to facts and using credit wisely, you can build and maintain a strong credit score that opens doors and saves you money throughout your life.
