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Credit scores are one of the most misunderstood parts of personal finance. Many people unknowingly damage their credit simply because they believe outdated or incorrect information. These myths can stop you from qualifying for loans, increase your interest rates, or delay major life goals like buying a home or car.
In this video, we break down the top 15 common myths about credit scores, including misconceptions about checking your score, closing credit cards, paying off debt, income level, and how long it really takes to build good credit. Each myth is explained in simple terms so you can make smarter financial decisions with confidence.
If you’ve ever been confused about how credit scores really work, this video will clear things up and help you avoid costly mistakes. Make sure to watch till the end — the final myth surprises almost everyone.
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0:00
Hello and welcome to our channel, Top
0:02
10s You Should Know. Have you ever
0:04
looked at your credit score and thought,
0:06
"Wait, why did it drop?" Or maybe you've
0:09
heard things like, "Checking your own
0:11
credit will ruin it." Or, "You need debt
0:13
to build credit." Well, let me tell you,
0:16
most people live their entire lives
0:18
believing these myths, and it quietly
0:21
costs them thousands of dollars. So
0:23
today we're breaking down the top 15
0:26
common myths about credit scores and
0:28
what's actually true behind them. One
0:32
myth. Checking your own credit score
0:34
hurts it. One of the biggest
0:36
misunderstandings is that checking your
0:38
own credit score will make it drop.
0:41
That's simply not true. When you check
0:43
your own score, called a soft inquiry,
0:45
it has zero impact on your credit. Hard
0:48
inquiries on the other hand happen when
0:50
lenders check your credit to approve a
0:51
loan or credit card and those can
0:53
slightly lower your score but you
0:56
checking your own score that's
0:58
self-awareness not self-destruction.
1:01
Two myth. You need to carry a balance to
1:04
build credit. This one sounds logical
1:06
but it's false. You don't need to carry
1:09
a balance or pay interest to build good
1:11
credit. What really matters is on-time
1:13
payments and low credit utilization.
1:15
That means paying your card off in full
1:17
each month actually helps you more than
1:19
carrying debt. Interest only benefits
1:21
the bank, not you. Three myth. Closing
1:25
old credit cards helps your score. Many
1:28
people think closing old accounts will
1:30
make your score go up. But in reality,
1:32
it can hurt your credit. Why? Because
1:35
the age of your credit history and total
1:37
available credit both influence your
1:39
score. When you close an old card, you
1:41
shorten your average credit age and
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reduce your available credit, which
1:45
increases utilization. Keep old accounts
1:48
open if they don't cost you fees. Four
1:51
myth. Your income affects your credit
1:53
score. It's easy to assume that higher
1:55
income equals better credit, but the
1:57
truth is your income isn't even part of
2:00
your credit score formula. Credit
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bureaus don't know how much you earn.
2:04
They only care about how you handle the
2:06
credit you have. A millionaire who
2:08
misses payments can have a worse score
2:10
than a teacher who pays every bill on
2:12
time. Five myth. All debt is bad for
2:16
your credit. Debt itself isn't evil.
2:19
Mismanaging it is. Having different
2:21
types of debt, like a mortgage, student
2:23
loans, or a credit card actually
2:25
improves your credit mix. It shows
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lenders you can handle multiple
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financial responsibilities responsibly.
2:32
The key is keeping balances low and
2:34
payments consistent. Responsible debt
2:36
can build your score, not break it. Six
2:40
myth. Paying off a collection removes it
2:42
from your report. Paying off a debt in
2:44
collections is a great step, but it
2:47
doesn't erase the record immediately.
2:49
The collection account stays for up to
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seven years, though it will show as
2:53
paid, which is far better for your
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reputation. Time and consistency heal
2:58
credit wounds, not magic erasers. Seven
3:02
myth. You only have one credit score. In
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reality, you have dozens, even hundreds
3:06
of scores. Lenders use different
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versions of FICO or Vantage score
3:11
depending on what you're applying for, a
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mortgage, car loan, or credit card.
3:15
That's why one lender might approve you
3:17
while another rejects you. The key,
3:19
focus on healthy habits, not chasing one
3:21
perfect number. Eight myth. Credit
3:24
repair companies can quickly fix
3:26
everything. Here's the truth. Credit
3:28
repair companies can't do anything you
3:30
can't do yourself, and definitely not
3:32
overnight. Some are legitimate, but many
3:34
are scams that charge high fees for
3:36
disputing information you could fix for
3:38
free. Building credit takes time,
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discipline, and accuracy, not shortcuts.
3:43
Nine myth. A high salary guarantees a
3:46
high score. Your credit score measures
3:49
behavior, not income. You can make six
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figures and still have a terrible score
3:53
if you're constantly missing payments or
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maxing out cards. Likewise, a modest
3:58
earner who's punctual and disciplined
4:00
can have a near-perfect score. Credit
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isn't about wealth, it's about trust. 10
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myth. Using a debit card helps build
4:08
credit. Debit cards are great for
4:10
managing spending, but they don't affect
4:12
credit at all because they don't involve
4:14
borrowing. Credit history is built
4:16
through accounts that report to credit
4:18
bureaus like credit cards, loans, and
4:20
lines of credit. Debit equals your
4:23
money. Credit equals borrowed money. Two
4:26
very different worlds.
4:28
11. Myth: Applying for multiple cards
4:31
boosts your score. Actually, each new
4:34
application triggers a hard inquiry,
4:36
which can slightly reduce your score for
4:37
a few months. Applying for multiple
4:40
cards too quickly looks risky to
4:41
lenders. Be selective. Apply
4:43
strategically, not impulsively. 12.
4:46
Myth: Once you have bad credit, you're
4:49
stuck forever. This one destroys
4:50
confidence, but it's wrong. Bad credit
4:53
is temporary if you take the right
4:54
actions. Pay on time, keep utilization
4:57
low, and avoid unnecessary applications.
5:00
Time heals credit, and small, consistent
5:02
steps rebuild trust. Your score is a
5:04
reflection of your habits, not your
5:06
past. 13. Myth. You don't need to worry
5:09
about credit if you don't plan to
5:11
borrow. Even if you're debtree, your
5:13
credit still matters. Landlords,
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employers, insurers, they all might
5:18
check your credit to assess reliability.
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A poor score can mean higher insurance
5:23
rates or lost job opportunities. Think
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of it as your financial reputation
5:27
because someday someone important, a
5:30
landlord, a boss, or even a bank
5:32
offering a great opportunity might take
5:34
a quiet peak. And in that moment, your
5:36
credit will either open the door or
5:38
quietly close it. 14. Myth: Paying rent
5:42
and utilities doesn't help credit. For
5:45
years, this was true, but not anymore.
5:48
Today, services like Experian Boost and
5:50
Rent Track can add your rent, utilities,
5:53
and even phone payments to your credit
5:55
file. It's one of the most underrated
5:57
ways to build a score responsibly
5:59
through bills you're already paying.
6:01
Single year of on-time rent can
6:03
sometimes move your score by 30, even 50
6:06
points. So, if you're paying regularly,
6:08
let your credit reflect that because in
6:10
today's world, good behavior shouldn't
6:12
go unseen. It should be rewarded. 15.
6:16
Myth. You need perfect credit to succeed
6:18
financially. There's something deeply
6:20
toxic about how people talk about
6:22
credit, like you're only financially
6:25
worthy if your score is 800 or above.
6:27
That's a myth that quietly destroys
6:29
confidence. Here's the truth. You don't
6:32
need a perfect credit score to live a
6:34
great financial life. In fact, anything
6:37
above 7 and 60 already qualifies you for
6:39
the best interest rates, best loans, and
6:42
best opportunities.
6:43
The difference between a 780 and 850
6:46
score is often just a few dollars in
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interest, but the difference in peace of
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mind, massive. Chasing perfection makes
6:54
you anxious, obsessive, and scared to
6:56
make financial moves. Life isn't meant
6:58
to be lived like that. The real goal of
7:01
credit is stability, being trusted,
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being consistent, being dependable. What
7:06
matters is that your credit works for
7:08
you, not that you become a slave to it.
7:10
Remember, even billionaires don't have
7:12
perfect scores. They simply have
7:15
control. So, if your score isn't
7:17
flawless, don't feel shame. Feel power
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that you're learning, managing, and
7:21
growing. Credit isn't your identity.
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It's just a tool. Treat it with respect.
7:27
But don't worship it. Because the truth
7:29
is, financial success isn't about being
7:31
perfect, it's about being prepared. And
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there you have it, the top 15 common
7:36
myths about credit scores. So, tell me,
7:39
which of these myths did you believe
7:41
before today? And which truth surprised
7:43
you the most? Let's talk about it in the
7:46
comments below. And don't forget to
7:48
like, share, and subscribe for more
7:50
insights from Top 10s You Should Know.
#Credit & Lending
#Credit Reporting & Monitoring