12 Falsehoods About Credit Scores That Almost Everyone Believes

SAVING & SPENDING - CREDIT SCORE & REPAIR
What you think you know about your credit score could be hurting you.
Updated July 13, 2023
Fact checked
man holding smartphone showing credit score

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A high credit score can help you qualify for credit cards and better interest rates on mortgages, auto loans, and personal loans to help you get ahead financially.

However, many people believe things about credit scores that simply aren't true. Let’s take a look at some of them.

Everyone is born with a credit score

Farknot Architect/Adobe woman holding three different cards in hand choosing one to make payments

Credit scores are created the first time an organization inquires about your creditworthiness, likely because you applied for a credit card or a loan. It then develops over time.

Some ways to establish good credit are to open credit card accounts, utilize those cards, and pay them off in full each month.

Another method is to take out a loan and make the full payment (or more) each month. Steps like these could help you establish good credit.

You only have one credit score

Tada Images/Adobe smartphone showing showing excellent credit score

Different credit agencies have slightly different models when it comes to reporting, which may skew one score slightly higher or lower than another.

This means that your score from one agency like Experian might differ from that of another agency like FICO.

You can spend up to your limit and not pay the monthly minimum

Wayhome Studio/Adobe woman sitting at table reveiwing utility bills while making calculations on spiral notebook

While your credit limit may far exceed your monthly expenses, maxing out your cards each month is not a smart idea, especially if you can’t pay the balance in full each month.

That being said, if you max out your limit, you have to at least pay the minimum payment each month.

Carrying a high balance on your credit card increases your score

KMPZZZ/Adobe happy woman sitting at table holding card to shop using smartphone

Absolutely not. In fact, it’s important to keep your credit utilization (the amount of credit balance you carry versus the credit limit you have) as low as possible.

Paying off your full credit card bill on the due date each month is one of the best ways to maintain a high credit score.

Your credit score drops every time you check it

Koshiro/Adobe credit karma website on smartphone

There are many services you can use — such as Experian and Credit Karma — to check your credit score for free without negatively impacting your credit score.

People often get confused with hard credit checks, which can lower your credit score (more about this later).

Using your debit card boosts your credit score

279photo/Adobe holding card to make payment using pos terminal

Using a debit card is a fail-safe if you’d rather not assume the risk and responsibility that comes with a credit card.

However, debit card usage is tied directly to your checking account and has zero effect on your credit score.

Hard credit checks won’t affect your credit score

wutzkoh/Adobe man calculating house loans

Yes, they will. Hard credit checks take place in several different scenarios, like when you apply for a new credit card, a mortgage loan, or a rental apartment.

Hard credit checks may lower your credit score for a little while. But with continued, responsible, and timely payments, your credit score should go back up shortly thereafter.

You don’t have to worry about your credit score

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If you want to buy or rent a home, purchase a car, take a small business loan, or get approved for new credit cards, you should be concerned with your credit score.

Through responsible financial planning, boosting your credit score doesn’t have to be difficult (or scary).

High credit scores equate to wealth

Andrey Popov/Adobe man holding smartphone showing credit score

Nope. Credit scores are simply a measure of risk: You’re a good credit risk if you have a good credit score. Credit scores aren’t a measure of how much money you have.

Those who have higher credit scores tend to utilize less of their available credit line. Although, many people spend money in advance that they don’t have in their bank accounts. 

This can lead to troublesome credit card debt, which will decrease your overall credit score.

You can’t get a credit card with a low credit score

bongkarn/Adobe female accountant in suit explaining the benefits of new credit card to female client across the table in bank

Not necessarily. Many credit cards don’t require a super high credit score to qualify.

If you have a lower credit score, it’s a good idea to apply for a credit card that accepts those with lower credit scores. If approved, use your monthly line of credit and pay your bill in full each month.

Eventually, your credit score will increase and you’ll be eligible for more types of credit cards that offer more perks and benefits.

Closing credit cards boosts your credit score

Krakenimages.com/Adobe woman standing at atm covering mouth in shock using hand while showing card

Definitely not. Closing a credit card adversely affects your credit score.

If you no longer use a particular card, it’s a smarter idea to pay off the balance and just stop using the card.

After several years of inactivity, credit card companies will close it for you, and this won’t affect your credit score.

Closing a paid-off account will remove it from your credit report

utah51/Adobe calculator placed on papers with credit score and card statement on table

Closed accounts will stay on your credit report for varying lengths of time. Accounts that were in positive standing when you closed them will stay on your credit report for 10 years.

Similarly, accounts that were in negative standing when you closed them will stay on your credit report for seven years.

Student loans don’t affect your credit score

terovesalainen/Adobe man using calculator and reviewing papers to calculate fees

Like credit card debt or other loan debt, the status of your student loan balance is always factored into your credit score.

It’s important to keep up with your monthly student loan payments to ensure you aren’t in delinquent status, which could lower your credit score.

Having no credit score is better than having a credit score

kamiphotos/Adobe man using card to make online payment using laptop

It’s imperative to start building your credit score early in life. You’ll have more financial opportunities at every turn if you do so.

This is especially true if you want to be able to access lines of credit, buy or rent a home, purchase a car, and be eligible for the most favorable interest rates possible.

Opening more credit cards is bad for your credit score

Kittiphan/Adobe woman sitting with cards bills and smartphone calculating utility bills using calculator

If you’re responsible with credit card payments — meaning you pay your bill in full and on time each month — opening new lines of credit won’t lower your credit score in the long run.

In fact, having extra lines of credit that are all in good standing could improve your credit score more than if you have just one or two lines of credit with high balances.

Bottom Line

Drobot Dean/Adobe happy woman holding card and smartphone in hands

Credit scores can help you get ahead financially in many ways. And while building a credit score can take some time and careful planning, it doesn't have to be scary.

With smart financial decisions and planning, you’ll be on your way to better credit in no time.

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Author Details

Adam Palasciano Adam Palasciano is a personal finance-obsessed and money-savvy individual who loves to hash out content on all things saving money. He specializes in writing millennial-friendly personal finance content, covering topics ranging from trending financial news, debt, credit cards, cryptocurrency, and more.

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