Credit Score Myths That Keep People From Borrowing Wisely

This is one of the most persistent myths, and it stops people from monitoring their own financial health. There are two types of credit inquiries: soft and hard. When you check your own score — through AnnualCreditReport.com, your bank's app, or a credit monitoring service — it registers as a soft inquiry. Soft inquiries are invisible to lenders and do not affect your score at all. Hard inquiries happen when a lender checks your credit because you've applied for new credit. Those can cause a small, temporary dip. Knowing the difference means you can check your own score as often as you like without worry.

This myth may have started because people confused "using" credit with "carrying" a balance. What actually helps your score is demonstrating that you use credit responsibly over time — meaning you make on-time payments and keep your balance low relative to your limit. Carrying a balance from month to month only means you're paying interest charges, which helps the card issuer, not you. Paying in full each month avoids interest entirely while still showing active, responsible use. For a deeper look at the factors that actually move your score, see what shapes your credit score.

It feels tidy to close accounts you don't use — but your credit score doesn't reward tidiness. Two things happen when you close a card: your total available credit drops (which can raise your credit utilization ratio), and over time the average age of your accounts may decrease. Both of these changes can lower your score. Credit utilization — how much of your available credit you're using — is one of the most significant factors in most scoring models. If you have a card with no annual fee that you rarely use, leaving it open and making an occasional small purchase on it is often the better move.

The most commonly used scoring models top out at 850, but chasing that number isn't a practical goal and isn't necessary. Most lenders categorize scores into bands — such as 'good,' 'very good,' and 'exceptional' — and offer their most competitive rates to anyone above a certain threshold, often around 740 to 760, depending on the lender and loan type. Moving from a poor score to a good score makes a meaningful difference in what you'll pay. Moving from a very good score to a perfect one usually makes little to no difference in your actual loan offer. Put your energy into building a consistently solid score, not a flawless one.

Credit scores measure how reliably you manage debt, not how much money you make. A high earner who misses payments regularly can have a poor credit score, while someone with a modest income who always pays on time can have an excellent one. Lenders may ask about income separately when you apply for credit — to assess whether you can afford repayments — but that information doesn't feed into your score. What does matter includes payment history, amounts owed, length of credit history, types of credit, and new credit applications. Our guide to what your credit score actually means breaks down each of these elements clearly.

Your credit report belongs to you alone. Getting married doesn't merge credit files, and your spouse's credit history — good or bad — doesn't automatically appear on your report or change your score. Where things can get intertwined is if you open joint accounts or co-sign a loan together. In those cases, the account activity will appear on both credit reports and affect both scores. If one partner has a significantly lower score, it's worth building that score independently before applying for joint credit, since lenders often use the lower of the two scores when evaluating a joint application.