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Your credit score affects many different aspects of your finances. For instance, it can influence your chances of success when applying for a loan, the interest rates you receive, and the size of the resulting payments.

Despite its importance, many consumers still believe credit score myths that lead to costly mistakes or missed opportunities.

However, understanding how credit scores work doesn’t have to be complicated. By separating fact from fiction, you can build your credit confidently and avoid believing common misconceptions.

Here are five common credit score myths that deserve to be retired.

Does Checking Your Credit Score Hurt Your Credit?

No, checking your own credit score does not hurt your credit score.

Many people avoid reviewing their credit because they worry it will lower their score. Fortunately, checking your own credit is considered a soft inquiry, which has no impact on your credit score.

The confusion often comes from hard inquiries, which can occur when you apply for new credit – think personal loans, auto loans, mortgages, and credit cards.

Applying for different loans or credit cards may cause your score to drop a few points, but it’s usually temporary. If you make consistent payments on existing debt and your bills are paid on time, your credit score should rebound in a few months.

While hard inquiries may have a small temporary impact, simply monitoring your own credit report or score will not. In fact, requesting a credit score individually may improve your situation in the long run.

Reviewing your credit regularly can help you identify errors, check for signs of fraud, and better understand your financial situation.

Does Carrying a Credit Card Balance Improve Your Credit Score?

No, carrying a credit card balance does not help improve your credit score.

One of the most persistent credit myths is that you need to maintain a balance and pay interest to build good credit. On the contrary, credit scoring models do not reward consumers for carrying debt month after month.

Instead, what matters most is making payments on time and keeping your credit utilization ratio low. You can use your credit card like usual and still pay the balance in full each month.

Carrying a balance from one month to the next can harm you financially. Firstly, it increases your credit utilization ratio, which is one of the most impactful stats when determining your score. Having a high utilization ratio signals to lenders that you may have trouble managing debt.

Second, a high balance means you’ll end up paying more money in credit card bills due to interest charges. Accruing interest on high balances can compound and snowball into a debt spiral, which can be difficult to sustain over time.

Always do your best to pay your credit card balances in full each month. Or pay down as much of your outstanding balances as possible consistently. Doing so may help you minimize interest charges while continuing to build a positive credit history.

Does Closing a Credit Card Automatically Improve Your Credit Score?

No, closing a credit card does not automatically improve your credit score.

Some consumers believe that having fewer credit cards will make them appear more financially responsible. However, closing an account can sometimes have the opposite effect.

When you close a credit card, you reduce your available credit. This can increase your credit utilization ratio, which may negatively affect your score.

The leading credit reporting agencies also factor in the overall age of your credit when determining your score. Closing older accounts can influence the average age of your credit history.

So, even if you have an open credit card from years ago that you are no longer using, it may be better to keep it.

Before closing a credit card, consider how the decision may affect your overall credit profile. For instance, if you aren’t planning to finance a car or a home any time soon, closing an old, unused card might be the best option.

Does Your Income Affect Your Credit Score?

No, your income is not a factor in calculating your credit score.

It is easy to assume that higher income automatically leads to higher credit scores. Still, credit scoring models generally focus on how you manage credit — not how much money you earn.

A person with a modest income can have excellent credit if they consistently pay bills on time and manage debt responsibly. Likewise, a high-income earner can have a lower score if they miss payments or carry excessive debt.

One way a high income can harm your credit prospects is the phenomenon known as “lifestyle creep.” Also known as “lifestyle inflation,” it’s a practice that can lead someone to spend more on luxuries and unnecessary purchases to project a higher status.

Consequently, increased spending may lead to taking on more debt that will, ironically, impact one’s credit.

Strong credit is built through healthy financial habits, not income level alone. No matter the income level, good budgeting skills and financial discipline will ensure a strong, healthy credit score.

Is One Missed Payment Really That Important?

Yes, even a single missed payment can affect your credit score.

Payment history is one of the most important factors in many credit scoring models. Missing a payment can signal risk to future lenders and may negatively impact your score.

The best way to avoid accidental late payments is to establish a system that works for you. Some of these methods include:

• Setting automatic payments
• Establishing account alerts
• Adding calendar reminders
  

Consistency is one of the most effective ways to maintain a strong credit profile.

What Is the Best Way To Build and Maintain Good Credit?

The best way to build and maintain good credit is to practice responsible credit habits consistently.

While credit myths often promise shortcuts, there is no secret formula for achieving a strong credit score. Paying bills on time, keeping balances manageable, monitoring your credit, and using credit responsibly can all contribute to long-term success.

Understanding the facts can help you make informed financial decisions and avoid common mistakes. By focusing on healthy credit-building habits rather than outdated myths, you can build your financial future and work toward your goals confidently.

First Florida Credit Union empowers you to build a strong financial future. Check out our Featured Articles for financial tips on how you can adopt habits that lead to building strong credit.