Credit Score Myths You Should Stop Believing in 2025
Credit scores are vital for financial health, influencing everything from loan approvals to interest rates . However, many misconceptions persist, leading to poor financial decisions . Here’s a breakdown of common credit score myths you should stop believing in 2025.
Myth 1: Checking Your Credit Score Lowers It
This is one of the most persistent misconceptions . Fact: Checking your own credit score is a "soft inquiry" and has no negative impact on your score . Lenders' checks when you apply for a loan or credit card are "hard inquiries," which can cause a slight temporary decrease . Regularly monitoring your score is actually encouraged and helps you spot errors or identity misuse .
Myth 2: Closing Old Accounts Improves Your Credit Score
Fact: Closing old credit accounts can be counterproductive . It may reduce your available credit and shorten your average credit history length, both of which can lower your score . Maintaining older, well-managed accounts demonstrates a longer, positive credit history .
Myth 3: You Only Have One Credit Score
Fact: There are various credit scoring models, and different credit bureaus (like CIBIL or CRIF) may use different models to calculate scores . This means you can have multiple scores depending on the model and the bureau .
Myth 4: Disputing Accurate Information Will Improve Your Score
Fact: While you have the right to dispute errors on your credit report for free, you cannot have accurate but negative information removed . Disputing accurate information might lead to its temporary removal during investigation, but it will reappear once confirmed .
Myth 5: A High Credit Score Indicates Wealth
Fact: Your financial status or income does not directly influence your credit score . Credit scores are calculated based on your credit history, payment history, and credit utilization . Even wealthy individuals can have poor credit scores if they fail to pay debts on time .
Myth 6: Negative Credit History Lasts Forever
Fact: Significant negative events like bankruptcy or foreclosures do not permanently harm your credit . While they severely impact your score, their influence diminishes over time . Most negative information falls off your report after 7 to 10 years, depending on the event .
Myth 7: Paying a Balance Every Month Is Always Good for Your Score (for credit cards)
Fact: While paying on time is crucial, consistently carrying a balance (even if paid monthly) can damage your score . What truly matters is consistent, on-time payments and maintaining a credit utilization rate (the amount of credit used vs. available) below 30% .
Myth 8: Having Too Many Credit Cards Always Damages Your Score
Fact: While opening too many cards in a short period can lead to multiple hard inquiries and impact your score, having multiple cards is not inherently bad . If managed well, multiple cards can help reduce your credit utilization ratio (a significant factor), provided you make on-time payments and don't close old accounts unnecessarily .
Frequently Asked Questions ?
Does checking my own credit score hurt it?
No, checking your own credit score is a "soft inquiry" and does not negatively impact it .
Should I close old credit card accounts to improve my score?
No, closing old accounts can reduce your overall available credit and shorten your credit history, which can negatively affect your score .
Does my income influence my credit score?
No, your income is not a factor in the calculation of your credit score. Scores are based on your credit history, payment behavior, and utilization .
How long does negative credit history stay on my report?
Most negative information, like bankruptcies or foreclosures, impacts your score for a period, but it does not last forever and typically falls off your report after 7 to 10 years .
Is it true that I only have one credit score?
No, there are various credit scoring models used by different credit bureaus, so you can have multiple credit scores .
Published on: July 22, 2025
Published by: PAVAN
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