Credit score myths that could be lowering your score

When it comes to personal finances, few topics are as misunderstood as credit scores. From well meaning friends to social media “money hacks,” it’s easy to get caught up in misinformation that can hold your financial health back. To help cut through the noise, let’s dissect a few of the most common credit score myths.

What you'll learn

• Myth #1: Checking your own credit score hurts your credit
• Myth #2: Carrying a balance improves your score
• Myth #3: Your income affects your credit score
• Myth #4: Closing old credit cards boosts your score
• Myth #5: Paying off a loan instantly gives you a big score increase
• Myth #6: A single late payment isn’t a big deal
• Myth #7: Using a lot of available credit is fine if you pay it off each month

Myth #1: Checking your own credit score hurts your credit

You can check your credit score as often as you like without any impact. These are called soft inquiries, and they’re totally harmless. Hard inquiries, such as applying for a loan or credit card, are the ones that can temporarily lower your score.

Checking your score early and often helps you spot errors or signs of identity theft. You can even request a full credit report from each of the main credit bureaus (Equifax, Experian, and Transunion), free of change once a year.

Myth #2: Carrying a balance improves your score

There is no benefit to maintaining a balance from month to month. Credit scoring models don’t reward you for paying interest, and continuing to pay interest, especially on loans or credit cards with high APRs. Paying in full is always best.

Myth #3: Your income affects your credit score

While income may play a role in how much credit you qualify for, it is not a factor in credit scoring formulas. You could make $200,000 a year and have a low score or make $40,000 and have an excellent one. It just depends on how you use the credit you have.

Myth #4: Closing old credit cards boosts your score

Closing an old credit card rarely helps your credit. More often, it hurts it. When you close a card, you reduce your total available credit, which can raise your credit utilization ratio (the percentage of credit you’re using). Higher utilization can lower your score and it is best to aim for a lower utilization score.

It can also shorten the length of your credit history, especially if the card you close is one of your oldest accounts. For example, that credit card you opened in college, even if it barely sees any use, helps establish a longer credit timeline. Keeping it open (as long as it has no annual fee) is usually better for your score.

Myth #5: Paying off a loan instantly gives you a big score increase

While paying off debt is a great financial move, it doesn’t always mean a higher score right away. In some cases, completing an installment loan (like a car loan) can cause a small dip because you’re removing a type of “active credit” from your mix. However, this dip is temporary and will recover.

Myth #6: A single late payment isn’t a big deal

Just one late payment (30+ days past due) can significantly impact your score—and it can stay on your credit report for up to seven years. To help ensure you don’t make a late payment, setting up autopay or payment reminders can help protect your score from otherwise preventable mistakes.

While a late payment can impact your score, you can come back from it. Credit scores ebb and flow and are designed to recover. To help improve your score after a mishap, work on ensuring you pay off balances on time and pay attention to your utilization score.

Myth #7: Using a lot of available credit is fine if you pay it off each month

Even if you pay in full, high utilization (how much of your credit limit you use) can lower your score if the balance is reported before payment. Paying attention to your credit utilization and keeping it under at least 30% is best when maintaining a solid credit score.

You can always improve your credit score, but understanding what really affects it empowers you to take control of your financial future with confidence. By separating fact from fiction, you can avoid unnecessary mistakes, build healthier habits, and make smarter decisions that support long term financial stability.