7 Credit Myths That Are Costing You Money Right Now

A lot of credit advice people pass around sounds smart but is actually wrong, and believing it can quietly cost you points and money every single month. Here are the biggest offenders.

Myth 1: Checking Your Own Credit Hurts Your Score

Checking your own credit is a soft inquiry and has zero impact on your score. You can check as often as you want. Only hard inquiries from lenders, triggered when you apply for new credit, have any effect at all.

Myth 2: You Need to Carry a Balance to Build Credit

This one costs people real money in interest for no benefit. Paying your statement in full every month builds credit just as well, if not better, than carrying a balance. Carrying debt only earns interest charges for the bank, not extra credit points for you.

Myth 3: Closing a Card You Do Not Use Helps Your Score

Closing an old unused card usually hurts you. It reduces your total available credit, raising your utilization ratio, and can shorten your average account age. Unless it has a high annual fee, an unused card is usually better left open.

Myth 4: All Debt Is Bad Debt

A healthy mix of credit types, revolving cards and installment loans, actually helps your score. Having zero credit history at all is often just as limiting as having bad credit history.

Myth 5: Income Affects Your Credit Score

Your income is not a factor in your FICO score at all. You could earn a million dollars a year and still have a low score if your payment history is poor. The score is entirely about how you manage credit, not how much you make.

Myth 6: A Paid Collection Disappears Immediately

Paying a collection does not remove it from your report under most scoring models. It stays for up to 7 years from the original delinquency date regardless of payment, unless it is disputed and removed or negotiated for deletion.

Myth 7: You Only Have One Credit Score

You actually have dozens of credit scores depending on the model and bureau used. FICO 8, FICO 9, VantageScore 3, and industry-specific scores can all show different numbers for the exact same credit file at the exact same time.

Not sure what is really affecting your score? Get a free CreditGM analysis and we will tell you the truth, not the myths.