Widely Believed Credit Score Myths — and the Facts Behind Them

Credit inquiries fall into two categories. A hard inquiry occurs when a lender pulls your credit as part of an application decision — this can shave a few points off your score temporarily. A soft inquiry occurs when you check your own score, when a current creditor reviews your account, or when a company pre-screens you for an offer. Soft inquiries are invisible to lenders and do not affect scoring models at all. Avoiding regular credit checks out of fear of damage is counterproductive; staying informed about your own report is a sound financial habit.

Two factors are directly affected when you close an account. First, your total available credit drops, which increases your credit utilization ratio — the percentage of your available credit you're actively using. Most scoring models reward keeping this figure low. Second, closing an old account can eventually reduce the average age of your credit history, another component scoring models consider. Closing accounts to appear more financially tidy can produce the opposite of the intended effect. If an account has no annual fee and you're not tempted to overspend on it, leaving it open and occasionally using it for a small purchase is generally the wiser approach. See our credit utilization explainer for more on how this calculation works.

This myth may stem from a confusion between having a credit card and carrying a balance on it. Using a credit card and paying the statement balance in full each month demonstrates responsible credit use and is reported to the bureaus just as positively as carrying a balance — with one key difference: you pay no interest. Deliberately leaving a balance to 'show activity' results in unnecessary interest charges without any scoring upside. Paying your balance in full is the financially optimal approach.

Credit scores are calculated entirely from information in your credit report — payment history, amounts owed, length of credit history, credit mix, and new credit. Your salary, hourly wage, employment status, or net worth appear nowhere in that calculation. A high earner with a history of missed payments will score lower than a modest earner with a spotless payment record. Lenders may separately consider income when evaluating your ability to repay, but that assessment happens independently of your credit score. The distinction between your credit report and credit score is explored further in our article on the credit report vs. credit score distinction.

Under the Fair Credit Reporting Act (FCRA), most negative information can remain on your credit report for seven years from the date of the original delinquency. Chapter 7 bankruptcy can remain for up to ten years. While the impact of older negative items does fade over time as more recent positive behavior accumulates, the item itself stays visible to potential lenders for the full reporting period. This timeline underscores why a single missed payment carries real long-term consequences — a point covered in depth in our article on what really happens when you miss a payment.

FICO alone has dozens of score versions, and VantageScore offers its own separate models. Beyond that, the three major credit bureaus — Equifax, Experian, and TransUnion — may each hold slightly different information about you, since not all creditors report to all three. The score a mortgage lender pulls may differ from the one your bank shows you in its app. Understanding that a single number is not the whole picture helps set realistic expectations and reinforces why monitoring all three bureau reports matters.