Common Credit Score Myths

Common Credit Score Myths

Many people believe things about credit scores that simply are not true. These myths can lead you to make decisions that hurt your financial health. Let's clear up some of the most common misconceptions, so you can make smarter choices about your credit.

Myth 1: Checking your own credit score will hurt it. You might worry that looking up your own credit score will lower it. This is false. When you check your own credit, it's called a "soft inquiry" and does not affect your score. Only "hard inquiries" - like when you apply for a new loan or credit card - can impact your score. So, feel free to monitor your credit as often as you need.

Myth 2: Closing old credit accounts always helps your score. It might seem like closing an old or unused credit card is a good idea, but this can actually hurt your score. Your credit history length is important; older accounts show you have more experience managing credit. For example, if you close a credit card you've had for 10 years, your average account age will drop, which can lower your score.

Myth 3: You must carry debt to build credit. Some people think you need to keep a balance on your credit cards to build your score. In reality, you can build good credit by paying your bills on time and keeping your balances low. Carrying debt just means you'll pay more in interest, which costs you money without helping your score.

Understanding the truth behind these myths helps you use credit more wisely and avoid unnecessary mistakes. Always check the facts before making decisions about your credit.