Your credit score plays a huge role in your financial interactions, whether you are applying for a credit card or a loan, or even renting an apartment. Yet, there are several myths surrounding this very important number. As it becomes easier and easier for lenders to check your credit history, thanks to technological advances and credit checking software, it's even more important today to burst some of this myth and mystery surrounding your credit score.
Myth 1: Checking your credit score lowers it
This is perhaps the most common myth. Let’s clear this once and for all—checking your own credit score—called a soft pull—does not hurt your score; compared to “hard pulls” where lenders check your score once you put in an application to borrow money or apply for a credit card. These kinds of inquiries actually do hurt your score. In fact, if you check your score from time to time, you will be able to better monitor your finances and catch any mistakes early and act on improving your credit score.
Myth 2: High income translates to high credit score
Income and credit score are unrelated. You can have high income but poor credit score if you've paid late or gone over your credit limit too often. Credit report companies calculate scores based on payment history, credit use, length of credit history, and credit type used—none of which have to do with how much you make. Thus, financial health does not necessarily mean a good score unless you also manage credit well.
Myth 3: Reducing old credit cards improves your score
Closing old credit accounts hurts your credit. The length of your credit accounts adds up to around 15% of your credit score. By closing old credit accounts, especially those with a good payment history, you reduce the age of your credit history and your credit available limit—both adverse factors affecting your credit score. Instead of closing old cards, keep using them occasionally and pay on time.
Myth 4: One missed payment doesn't matter
Even a single delayed payment will erode your credit score, especially if it's 30 days or more overdue. Payment history has the highest impact in your credit score. Late payments are there for years and can lower your chances of being approved for a loan. Always set up auto-debit or reminders so that your EMIs and credit card payments are timely, each time.
Myth 5: You need to have a balance in order to build credit
Keeping a balance and paying interest doesn't enhance your score—it might actually harm it if your credit utilisation is more than 30%. The optimal way to build a good credit score is to make full credit card payments monthly. This proves to lenders that you're a responsible debtor and prevents excessive payment of interest as well as maintaining a low credit utilisation ratio.
Stay well-informed to stay credit-healthy
In 2025, when digital lending is more sophisticated, knowing your credit score matters. Being a victim of myths might compel you to form bad habits that hurt your score and limit your future financial prospects. Be always reliant on verified sources and check your credit reports from time to time. A good credit score isn't just about loans—Finance confidence and power rely on it.
FAQs
Q1. Should I check my credit score regularly?
You need to check your credit score at least once every quarter. Most websites have free monthly check without affecting your rating.
Q2. How do I rapidly improve a low credit score?
There are no quick fixes, but you can improve your rating over time by paying bills on time, reducing outstanding debt, and limiting new credit applications.
Q3. Does having more than one loan lower my score?
Yes, having multiple loan requests in a short period can create multiple hard inquiries that temporarily impact your score.
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