Credit Score Myths That Persist—and the Facts Behind Them

Credit inquiries come in two types: soft and hard. Soft inquiries — which include checking your own score, pre-approval screenings by lenders, and employer background checks — are invisible to scoring models and do not affect your score. Hard inquiries, triggered when you formally apply for new credit, can cause a small, temporary dip. The confusion between the two has discouraged many people from monitoring their own credit, which is actually an important financial hygiene habit. You can check your reports at AnnualCreditReport.com without any scoring consequence.

Credit utilization — the percentage of your total available revolving credit that you're currently using — is a significant scoring factor. When you close a card, you eliminate that card's credit limit from your available total, which pushes your utilization ratio higher even if your balances haven't changed. Additionally, the length of your credit history matters; older accounts contribute positively to your average account age. Closing a long-standing card can reduce that average. Unless an account carries a fee you can't justify, keeping it open and occasionally using it is generally the lower-risk approach.

This myth likely originated from a misunderstanding of what 'using your credit' means to lenders. Scoring models reward responsible use of credit — meaning you spend on the card and pay reliably — but they do not reward carrying a balance. In fact, carrying a balance increases your utilization ratio, which can depress your score, and it costs you interest charges that serve no credit-building purpose. Charging regular expenses and paying the statement balance in full each month demonstrates responsible use without the added cost.

FICO and VantageScore — the two dominant scoring frameworks in the U.S. — do not include income, employment status, or net worth in their calculations. What they measure is how you've managed debt: whether you pay on time, how much of your available credit you use, how long you've held accounts, what types of credit you carry, and how often you apply for new credit. A high earner who misses payments will score lower than a moderate earner with spotless repayment history. Lenders may separately assess income when making a lending decision, but that's distinct from the score itself.

Under the Fair Credit Reporting Act (FCRA), most negative items — such as late payments, collections, or charge-offs — remain on your credit report for seven years from the original delinquency date. Bankruptcies may remain for up to ten years. No person or company, including a paid credit repair firm, can legally force a bureau to delete accurate, verifiable information ahead of that timeline. What credit repair companies can legitimately do is dispute genuinely inaccurate entries — something you can do yourself for free directly with the credit bureaus. Be cautious of services that promise dramatic score improvements through deletion of accurate records.