Top Credit Score Myths Busted

Your credit score is one of the most important numbers in your financial life, yet it's surrounded by myths and misconceptions. Let's bust the most common credit score myths and learn the truth.

Myth #1: Checking Your Credit Score Lowers It

FACT: This is completely FALSE!

When YOU check your own credit score, it's called a "soft inquiry" and has ZERO impact on your score. You can check it as many times as you want! However, when a lender checks your score for a loan application (hard inquiry), it may temporarily lower your score by a few points.

Myth #2: You Need to Carry a Balance to Build Credit

FACT: Absolutely FALSE!

You don't need to carry a balance or pay interest to build credit. In fact, paying your credit card bill in FULL every month before the due date is the BEST strategy. It builds credit without costing you interest charges.

Myth #3: Closing Old Credit Cards Improves Your Score

FACT: This is FALSE and can actually HURT your score!

Your credit history length matters. Closing old cards:

• Reduces your total available credit
• Increases your credit utilization ratio
• Shortens your credit history

Keep old cards open, even if you don't use them much. Just use them occasionally and pay off immediately to keep them active.

Myth #4: Income Affects Your Credit Score

FACT: Your salary has NO direct impact on your credit score!

Your credit score is based on your borrowing and repayment behavior, not your income. What matters is:

• Payment history (35%)
• Credit utilization (30%)
• Length of credit history (15%)
• Credit mix (10%)
• New credit inquiries (10%)

Myth #5: You Only Have One Credit Score

FACT: You have MULTIPLE credit scores!

In India, there are four main credit bureaus:

• CIBIL (most commonly used)
• Experian
• Equifax
• CRIF High Mark

Each may have slightly different scores based on the information they've received from lenders.

Myth #6: Paying Off Debt Immediately Removes It from Your Report

FACT: Paid accounts stay on your report!

When you pay off a loan or credit card, it gets marked as "closed" or "paid," but the account history remains on your credit report for up to 7 years. This is actually GOOD for your score as it shows a positive payment history.

How to Actually Improve Your Credit Score

1. Pay ALL bills on time - Set up automatic payments
2. Keep credit utilization below 30% - Use less than 30% of your credit limit
3. Don't apply for multiple loans/cards at once - Space out applications
4. Maintain a mix of credit - Credit cards + loans (if needed)
5. Monitor your credit report - Check for errors quarterly
6. Keep old accounts active - Don't close your oldest credit cards

Building good credit takes time and discipline, but understanding these myths helps you make smarter financial decisions. Focus on responsible credit behavior rather than quick fixes!