Common Myths About Credit Scores Debunked
Chosen theme: Common Myths About Credit Scores Debunked. Welcome to a clear, friendly guide that separates fact from fiction, shares real stories, and helps you take confident steps toward a healthier credit life. Join the conversation and subscribe for more myth-busting insights.
Soft inquiries, like checking your own score or pre-qualification offers, do not affect your credit score at all. Hard inquiries occur when you formally apply for credit and may slightly lower your score for a short time.
Myth 1: Checking Your Credit Score Hurts It
Regularly reviewing your credit helps you catch errors, track progress, and plan smarter. Monitoring identifies suspicious activity early, giving you time to dispute inaccuracies before they become costly. Subscribe for monthly reminders and practical checklists that keep you on track.
Myth 1: Checking Your Credit Score Hurts It
Myth 3: Carrying a Balance Improves Your Credit Score
Utilization, Not Debt for Debt’s Sake
Credit utilization is the percentage of available credit you are using. Lower is generally better. You do not need to carry debt across months; allowing a small statement balance and paying it in full can show responsible usage without interest.
Statement Date vs. Due Date Timing
Many scores capture your balance on the statement closing date, not the due date. Paying before the statement closes can lower reported utilization. Then paying the remainder by the due date avoids interest. Strategy beats superstition every time.
Real-World Win: Interest-Free Progress
Diego switched from carrying balances to paying in full before the statement closed. His utilization fell under 10%, interest charges disappeared, and his score climbed steadily. Want templates for payment schedules? Subscribe and grab our free planner.
Myth 4: Your Income Directly Determines Your Credit Score
Scores primarily weigh payment history, amounts owed, length of credit history, new credit, and credit mix. They do not directly factor salary size, savings, or job title, though lenders may still review those for approval decisions.
Myth 6: There’s Only One Credit Score
FICO and VantageScore are distinct models, each with multiple versions. The same credit report can generate different scores depending on the algorithm, weighting, and the specific purpose, such as general lending versus mortgage underwriting.
Myth 7: Paying a Collection Automatically Removes It From Your Report
Some scoring models treat paid collections more favorably than unpaid ones, while others still consider the historical derogatory. Paying can help approval decisions and future underwriting, even if the record remains for a period after resolution.
Myth 7: Paying a Collection Automatically Removes It From Your Report
Credit bureaus have adjusted medical collection reporting policies in recent years, including removing certain paid medical collections and delaying new reporting. Always verify current rules, as policy updates can meaningfully change your recovery strategy.
