Debunking Credit Score Myths: How Believing These Three Myths Can Keep Your Score Lower

Your credit score plays a pivotal role in your financial life, impacting your ability to secure loans, get favourable interest rates, and even land certain jobs.

Unfortunately, misconceptions about credit scores can lead to misguided financial decisions.

In this article, we’ll debunk three common credit score myths that, when believed, can actually harm your credit.

Checking Your Credit Hurts Your Score

One of the most pervasive myths is that checking your own credit report or score will negatively impact it.

The truth is, when you check your own credit, it’s considered a “soft inquiry” or “soft pull.”

Soft inquiries have no effect on your credit score.

In fact, regularly monitoring your credit is a responsible financial practice and can help you catch errors or potential issues early.

Closing Old Credit Accounts Improves Your Score

Some people believe that closing old credit accounts will boost their credit score. However, this is a misconception.

The length of your credit history is a crucial factor in your credit score calculation.

Closing old accounts can shorten your credit history, potentially reducing your score.

Instead of closing accounts, consider keeping them open and using them responsibly to maintain a positive credit history.

Paying Off Debts Erases Negative Information

Paying off debts is undoubtedly a positive step for your financial health, but it doesn’t immediately erase negative information from your credit report.

Late payments, collections, and other negative marks can stay on your report for a certain period, typically seven years.

However, as time passes, their impact on your credit score diminishes.

Consistently making on-time payments and managing your credit responsibly will gradually improve your score.

FAQs

Can someone else’s credit affect my score?

No, someone else’s credit cannot directly impact your credit score. Credit reports are tied to individual Social Security numbers, so only your financial behaviour and accounts affect your credit.

How often should I check my credit score?

It’s a good practice to check your credit report at least once a year. You can request a free credit report from each of the three major credit bureaus annually. Additionally, consider monitoring your score more frequently if you’re actively working to improve it.

Will my credit score improve immediately after paying off a debt?

Paying off a debt is a positive action, but your credit score improvement may not be immediate. Negative information can remain on your credit report for several years. Focus on consistent, responsible credit management to see gradual score improvement.

What’s the quickest way to improve a low credit score?

There is no quick fix for improving a low credit score. The best approach is to practice good financial habits, including making on-time payments, keeping credit card balances low, and avoiding new debt. Over time, these actions will lead to score improvement.

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