Most of What You’ve Heard About Credit Scores Is Wrong

Credit advice is everywhere, from well-meaning family members to Reddit threads and financial influencers. The problem is that a lot of it is flat-out wrong. And when you make financial decisions based on myths, you can actually damage the score you’re trying to protect. Let’s clear the air on the credit score beliefs that refuse to die, and give you the facts you need to make smarter moves.

Myth #1: Checking Your Own Credit Score Hurts It

This one is probably the most widespread, and the most harmless to debunk. When you check your own credit score or pull your credit report, it’s recorded as a soft inquiry. Soft inquiries have zero impact on your score. None. They don’t show up to lenders, and they don’t affect your creditworthiness in any way.

The inquiry that can affect your score is a hard inquiry: the kind that happens when a lender checks your credit because you’ve applied for a loan, credit card, or mortgage. Even then, a single hard inquiry typically drops your score by only 5 points or less, and the effect fades within a few months. The takeaway: check your own credit as often as you want. Staying informed is the whole point.

Myth #2: Carrying a Balance Builds Your Credit

This myth likely started as a misunderstanding of how credit utilization works. Some people believe that leaving a small balance on their credit card each month signals to lenders that they’re actively using credit. In reality, carrying a balance just means you’re paying interest, and that money goes straight to the credit card company, not toward your credit score.

What actually builds credit is using your card and paying the full balance on time, every month. Your utilization ratio (the percentage of available credit you’re using) is what matters, and lower is better. Keeping utilization under 30% is the general guideline, with under 10% being ideal for top scores. Pay in full, pay on time. That’s it.

Carrying a balance doesn’t build credit. It just costs you money. Pay your card in full each month and let your on-time payment history do the work.

Myth #3: Closing Old Credit Cards Improves Your Score

It seems logical: fewer cards means less temptation, a simpler financial life, and surely a cleaner credit profile, right? Wrong. Closing an old credit card can actually hurt your score in two ways.

First, it reduces your total available credit, which pushes up your utilization ratio, a key factor in your score. Second, it can shorten your average age of accounts, another scoring factor. A card you’ve had for ten years and never missed a payment on is a golden piece of your credit history. Closing it doesn’t erase that history immediately, but over time it will age off your report. The smarter move: keep old cards open and use them occasionally for a small recurring charge (like a streaming subscription) to keep them active.

Myth #4: Income Affects Your Credit Score

Your salary, hourly wage, or annual income has absolutely no bearing on your credit score. None of the major scoring models, FICO or VantageScore, factor in income at all. A person earning $40,000 a year can have a perfect 850 score. A high earner with poor payment habits can have a score in the 500s.

Lenders may ask about your income when you apply for credit (to assess your ability to repay), but that’s separate from your credit score calculation. Your score is built entirely on your borrowing and repayment behavior: payment history, amounts owed, length of credit history, types of credit, and new credit inquiries.

Myth #5: A Debit Card Helps Build Credit

Debit cards pull money directly from your checking account. Because there’s no borrowing happening, there’s nothing to report to the credit bureaus. Using a debit card, no matter how responsibly, will never help your credit score. The same goes for prepaid cards.

If you want to build credit through everyday spending, the tool for that is a credit card, ideally one you pay off in full each month. If you don’t qualify for a regular card yet, a secured credit card is a legitimate, credit-bureau-reported alternative that can get you on the board.

Myth #6: You Only Have One Credit Score

You actually have dozens of credit scores. FICO alone has multiple versions (FICO 8, FICO 9, FICO 10, plus industry-specific scores for auto loans and mortgages), and VantageScore has its own lineup. Different lenders use different models, so the score your bank shows you in their app may not be the same one a mortgage lender pulls when you apply for a home loan.

This doesn’t mean you need to obsess over every version. The factors that drive all scoring models are essentially the same: payment history, utilization, age of accounts, credit mix, and new inquiries. Focus on those fundamentals and all your scores tend to move in the same direction.

Myth #7: Paying Off a Collection Account Removes It from Your Report

This one stings. Many people assume that once they pay off a collection account, it disappears from their credit report like a settled debt that never happened. Unfortunately, that’s not how it works. A paid collection account still shows up on your report; it just gets updated to show a $0 balance. The negative mark remains visible to lenders for up to seven years from the original delinquency date.

That said, paying off collections is still worth doing. Under FICO 9 and VantageScore 3.0 and 4.0, paid collections carry less weight than unpaid ones. And some newer scoring models ignore paid collections entirely. Beyond the score impact, having unpaid debts can expose you to continued collection efforts and potential lawsuits. Pay it, just don’t expect it to vanish overnight.

The Bottom Line

Credit myths spread because the credit system is genuinely complicated, and most people never get a straightforward explanation of how it actually works. But acting on bad information is worse than knowing nothing at all. Now that you’ve got the facts, here’s what you can do right now:

• Check your own credit score. It costs you nothing and won’t hurt your score.
• Pay your credit card balances in full each month instead of carrying them.
• Keep old accounts open, especially ones with long histories.
• Stop expecting your debit card to build credit. Switch to a credit card you pay off monthly.
• If you have collections, pay them off to reduce their scoring impact under newer models.
• Focus on the fundamentals: on-time payments, low utilization, and a long credit history.

Credit isn’t magic, and it doesn’t reward complicated strategies. It rewards consistency. Get the basics right, ignore the myths, and the score will follow.