7 Credit Score Myths That Are Costing Americans Money

Credit score mythology is rampant — and acting on incorrect information costs Americans money in higher rates, declined applications, and missed optimization opportunities. Here are the 7 most common myths.

Myth 1: Checking your own credit score hurts it

Reality: Checking your own score is a "soft inquiry" and has zero impact on your score. Only "hard inquiries" (lenders checking your credit before lending) affect your score — and only by 5–10 points temporarily.

Myth 2: Closing credit cards improves your score

Reality: Closing cards typically hurts your score two ways: reduces total available credit (increases utilization) and can reduce average age of accounts. Leave cards open, especially older ones.

Myth 3: You need to carry a balance to build credit

Reality: Carrying a balance costs you interest and doesn't improve your score. Paying in full each month while showing utilization below 10% is the optimal strategy.

Myth 4: Income affects your credit score

Reality: Income is not in your credit report and does not affect your FICO score. A billionaire with a history of missed payments has a low credit score. A minimum-wage worker who never misses a payment has an excellent score.

Myth 5: All credit scores are the same

Reality: There are dozens of FICO models and multiple VantageScore versions. Mortgage lenders use FICO 2, 4, and 5. Auto lenders use FICO Auto Score. Your Credit Karma score (VantageScore) may differ by 20–60 points from your mortgage-relevant FICO.

Myth 6: A bad credit score follows you forever

Reality: Most negative items fall off your report after 7 years (bankruptcies: 10 years). With consistent on-time payments and low utilization, scores improve significantly in 12–24 months even from poor starting points.

Myth 7: You only have one credit score

Reality: You have dozens of credit scores across different models. The score from your bank app, Credit Karma, and your mortgage lender's pull can all be different — and all accurate, just measuring different things.