Five Credit Score Myths That Are Costing You
The most expensive credit score myth is that checking your own score hurts it. It does not. Here are four more.
Myth 1: Checking Your Score Hurts It
Someone told Marcus that looking at his credit score would lower it. He believed this for three years. It is false. Checking your own credit score is a "soft inquiry" and has zero impact on your score. Only "hard inquiries" — when a lender checks your credit as part of a loan or card application — affect your score, and only temporarily by 5-10 points.
Check your score as often as you want. You should be checking it monthly. Most banks and credit cards provide free FICO scores now. Use them.
Myth 2: You Need to Carry a Balance to Build Credit
This myth costs people money every month. Carrying a balance means paying interest. Interest rates on credit cards average 24% APR. You do not need to carry a balance to build credit — you need to use your card and pay it in full. On-time payments build credit. Interest payments build nothing except the card issuer's revenue.
Myth 3: Closing Old Cards Helps Your Score
Closing old credit cards typically hurts your score by increasing your credit utilization ratio and reducing your average account age — two factors that together account for 30% of your score. An old card with no annual fee should stay open and used occasionally (once per quarter is sufficient) to keep the account active.
Myth 4: You Only Have One Credit Score
There are many credit scoring models — FICO 8, FICO 9, VantageScore 3.0, VantageScore 4.0, and others. Different lenders use different models. The score you see in your banking app may differ by 20-30 points from what a mortgage lender sees. The number matters less than the trend. Focus on the behaviors that improve all scoring models: on-time payments, low utilization, and account longevity.
Myth 5: A Perfect Score Gets You Everything
Moving from 760 to 800 to 850 makes minimal practical difference for most financial products. Lenders treat 760+ as prime credit. The difference in interest rates between 760 and 820 is typically less than 0.1% — negligible. The real threshold is getting from below 700 to above 720, where premium card and loan access opens. After 760, optimizing your score is lower priority than optimizing your cards.