You’ve probably spent a weird amount of time staring at that little three-digit number on your banking app. Most of us do. We treat it like a high score in a video game, assuming that if we hit 800, we’ve "won" at money. But here is the thing about credit score myths: most of what we’ve been told by well-meaning parents or TikTok influencers is just flat-out wrong.
Numbers don't lie, but the systems that calculate them are incredibly opaque.
Take the "closing old accounts" trick. You might think getting rid of that dusty old department store card from college is "cleaning up" your financial life. It isn't. In fact, doing that often tanks your score faster than a missed payment because you’re nuking your "length of credit history." It's counterintuitive. It’s annoying. And it’s exactly how the FICO and VantageScore systems work.
The 30% Utilization Rule is Basically a Guess
Everyone tells you to keep your credit utilization under 30%. You’ve heard it. I’ve heard it. Even your Nana has probably heard it. But if you actually look at the data from FICO (the Fair Isaac Corporation), people with the "perfect" 850 scores aren’t hovering at 29%. They are usually under 7%.
The 30% mark is just a safety net for people who are struggling. It's not a goal.
If you have a $10,000 limit and you’re carrying a $2,900 balance, the algorithm doesn't see a responsible borrower. It sees someone who is one car breakdown away from maxing out their cards. High-scorers treat their credit cards like debit cards—paying them off almost immediately. Did you know you can pay your bill before the statement even closes? That’s the real "hack." It forces the bank to report a 0% or 1% utilization to the bureaus.
It feels like cheating. It’s not. It’s just understanding how the reporting cycle works.
Why Your "Free" Score Might Be Lying to You
Have you ever applied for a mortgage and been shocked that the lender saw a score 40 points lower than what Credit Karma showed you? That’s because of the VantageScore vs. FICO divide.
Most free apps use VantageScore 3.0. It’s a great model, honestly. It’s snappy and easy to read. But 90% of top lenders—we’re talking Chase, Wells Fargo, the big guys—use FICO. Specifically, they use older versions like FICO Score 8 or even specialized versions for auto loans.
There are dozens of versions of you.
- FICO Auto Score 2, 4, 5, 8, 9: Used when you want a car.
- FICO Bankcard Score: What credit card issuers look at.
- FICO Score 2, 4, 5: These are the "classic" versions used for mortgages.
You don't have one score. You have a bucket of scores. If you're looking at a single number and thinking that’s your entire financial identity, you’re missing the forest for the trees.
Carrying a Balance Does Not Help You
This is one of the most persistent credit score myths out there. The idea is that if you leave $50 on your card and pay a little interest, the banks will like you more because you’re "profitable."
Stop. Please.
Banks love interest, sure. But the credit bureau—the entity actually generating your score—doesn't see how much interest you paid. They only see your balance and your payment history. Carrying a balance just costs you money. It provides zero benefit to your score. None. Zilch. According to the Consumer Financial Protection Bureau (CFPB), "paying your bill in full every month is the single best way to build credit without losing money to interest."
It’s that simple.
The Weird Logic of Closing Accounts
Let’s talk about that old card again. Length of credit history makes up about 15% of your FICO score. When you close an account, it stays on your report for 10 years if it was in good standing. So, it doesn't hurt you immediately.
But.
You’re losing that credit limit. If you have $20,000 in total available credit across four cards and you close one with a $5,000 limit, your utilization ratio just spiked. If you owe $2,000, your utilization went from 10% to over 13% instantly.
Also, once that 10-year window is up? Your "average age of accounts" drops off a cliff. If that was your oldest card, you’ve just made yourself look like a much younger, riskier borrower in the eyes of the algorithm. Unless the card has a massive annual fee that you can't justify, just throw it in a sock drawer. Buy a pack of gum on it once every six months so the bank doesn't close it for inactivity.
Employer Credit Checks Are Not What You Think
You’ve probably heard that "employers check your credit score." This is a half-truth that scares people.
In reality, in the U.S., employers cannot see your three-digit credit score. They see a "modified" credit report. This version leaves out things like your birth year or any information that could violate equal opportunity laws. They see your debt-to-income ratio (sorta) and your history of late payments.
Why do they care? It’s about "financial responsibility." If you’re applying for a job in finance or a role with a security clearance, they want to make sure you aren't so deeply in debt that you might be tempted to commit fraud. But for most jobs? They aren't even looking. And even if they do, they aren't seeing that 742 you’re so proud of.
Checking Your Own Credit Doesn't Hurt You
"Don't check your score, it’ll go down!"
I hear this at least once a week. We need to distinguish between "Hard Inquiries" and "Soft Inquiries."
- Hard Inquiry: You apply for a loan. A lender pulls your credit. This usually drops your score by 5 points or less.
- Soft Inquiry: You check your own score on an app, or an employer does a background check. This has zero impact.
You should be checking your report frequently. Not for the score, but for errors. A 2021 study by Consumer Reports found that 34% of Americans found at least one error on their credit reports. That could be a wrong address, a debt that isn't yours, or a "late payment" that you actually paid on time.
The "Income" Fallacy
Your credit score doesn't care if you make $30,000 or $300,000 a year.
Seriously.
Income is not a factor in your credit score. You could be a billionaire with a 500 credit score because you never pay your bills on time. Conversely, you could be a student living on ramen with an 800 score because you have one card that you pay off religiously.
Lenders care about income when they calculate your Debt-to-Income (DTI) ratio, but that’s a separate calculation they do on their own. The credit bureaus—Equifax, Experian, and TransUnion—don't even know what your salary is. They just know if you're a "deadbeat" (the industry term for people who pay in full) or a "revolver" (people who carry balances).
Debit Cards and Prepaid Cards Don't Count
I’ve met so many people who say, "I have great credit, I've never been in debt, I use my debit card for everything."
That’s actually the problem.
If you don't use credit, you don't have credit. Using a debit card is just spending your own money. It doesn't prove to a bank that you can be trusted with their money. If you want a mortgage one day, you have to play the game. You need a history of borrowing and repaying.
Medical Debt Doesn't Always Count Anymore
This is a huge, recent change that many people missed. As of 2023, the three major credit bureaus stopped reporting medical debt that is under $500. Furthermore, paid medical debt is no longer included on credit reports at all.
This was a massive win for consumers. Medical debt is often the result of an emergency, not poor financial planning. If you have an old $300 hospital bill dragging down your score, check your report. It shouldn't be there. If it is, dispute it immediately.
Actionable Steps to Actually Improve Your Standing
Forget the "quick fixes" you see in Instagram ads. Real credit repair is boring. It takes time.
Review your actual reports
Go to AnnualCreditReport.com. It is the only site authorized by Federal law. You can get your reports for free from all three bureaus. Look for "collections" you don't recognize.
The "Late Payment" Phone Call
If you have a single late payment on an otherwise perfect record, call the bank. Ask for a "Goodwill Deletion." Tell them you’ve been a loyal customer and you just made a mistake. Sometimes, they actually say yes. It’s a human on the other end of the phone, usually.
Increase Your Limits (Without Spending)
Call your credit card company and ask for a limit increase. If they grant it, and you don't increase your spending, your utilization ratio drops instantly. Just make sure they can do this with a "soft pull" so it doesn't ding your score.
Automate the Minimums
Set every single credit card to "Auto-Pay Minimum." This is your insurance policy. Even if you forget to pay the full balance, you'll never be hit with a "30-day late" mark, which is the single most damaging thing that can happen to your score besides bankruptcy.
The "Authorized User" Strategy
If your credit is trashed, find a family member with a long-standing, perfect credit card. Have them add you as an "authorized user." You don't even need the physical card. Their entire history with that account—the age, the perfect payments—gets grafted onto your report. It’s like a credit score organ transplant.
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Credit is a tool, not a reflection of your worth. Treat it like a game of chess. You need to know the rules of the board to win, and most of those rules aren't what they seem on the surface. Understanding these credit score myths is the first step toward actually making the system work for you instead of against you.