Important Credit Score Myths That Can Harm Financial Health

Credit Score Myths That Can Harm Financial Health – Checking my credit score frequently will lower it, credit score will improve with increase in income, and more.

Credit Score Myths That Can Harm Financial Health 

When you want to obtain a credit card or a loan, your credit score is the first thing that lenders look into. Thus, it is important to establish a good credit score. But there are some myths around what impacts your credit score. For building and maintaining this 3 digit number between 300 and 900, you have to know what makes the credit score go down. Let us now read about credit score myths that can harm financial health.

Checking My Credit Score Often Will Lower It 

Hard enquiries are conducted by the lender when you apply for a credit card or loan. Hard enquiries are when the lender gets your report from the credit bureau to understand your creditworthiness. Too many hard enquiries from lenders within a short duration can decrease your score as it indicates credit-hungry behavior. However, when you check your credit score on your own, it is called a soft enquiry.  Soft enquiries do not have any impact on your credit score. In fact, you have to check your credit score regularly. This will help you understand what is lowering it and take the appropriate action to correct the problem. Also, if you find any discrepancies in your credit report, you can immediately contact one of the credit bureaus and rectify the mistake. 

The Credit Score Will Improve With Increase in Income 

This is a common myth. Your credit score is related to how you use your credit and not your income. Defaulting on EMI payments, high credit utilization ratio, and multiple applications for loans and credit cards can impact your credit score negatively regardless of your income. Higher income does not have a positive impact on your credit score, but it can improve your overall loan eligibility as it indicates higher repayment capacity. Despite a good credit score, individuals may not be eligible for certain credit cards or high ticket loans if their incomes are lower. 

Settling Your Credit Account Can Improve Your Credit Score

Settling your loan or credit card account is different from the closure of your loan or card account. Account closure means deactivating a loan or credit card after fully repaying outstanding dues as per schedule with amount due. If you are not able to pay the outstanding amount for some time, the lender may choose to extend the option to settle the account through a one time payment option where a certain amount of the debt may also be written off. The credit bureaus will be informed when you decide to settle your credit account, and it will start reflecting in your credit report as a ‘settled’ account.This settled account will remain on your credit report for a long time and all your loans or credit card applications in the future are probably going to be impacted negatively. Since you defaulted on your payments and settled the account, lenders will consider you as a ‘risky’ borrower in future and may hesitate to approve your loan or credit card applications.

Debit Cards Can Help in Building Credit Score

Debit cards cannot help you in improving your credit history. Any transactions made using a debit card will not be considered for credit score. This is because using a debit card, you are accessing only your own money. Your credit score gets impacted only when you take credit from your lenders. 

Closure of Old Credit Cards is Good For My Credit Score

People close old credit cards to save annual fees or just because they do not use them anymore. They feel that closing old credit cards is good for your credit score, but this is not the case. In fact, if you do not have a long credit history, don’t have a good credit mix, or have a low credit score, this may have a detrimental impact on your credit eligibility. Therefore, before you close old credit cards, consider three things. Firstly, closing old credit cards will affect the credit mix on your credit report. Lenders look for a healthy credit mix when they evaluate loan and credit card applications. A good credit mix will serve as a positive factor for the approval of credit card and loan applications. Secondly, lenders will look at the length of your credit history and if you have a good repayment history.  So, if you are closing old credit cards with both,  then you are removing this strong credit history from your credit report. So, if your credit history with other credit products is not very long, continuing with an older credit card is highly recommended. Finally, when you close your credit card, you are lowering your credit limit. This will result in higher CUR, which will impact your credit score negatively. 

A Credit Repair Agency Can Help You Improve Your Credit Score

Some people think that credit repair agencies can help you boost your credit score. But, this is not true. Credit repair agencies help you in finding out discrepancies and filing a dispute with the credit bureaus. They will help you understand why your credit score has dipped and what corrective actions you can take. It is you who have to take the steps. 

The Credit Score is the Only Determinant of Securing A Loan or Credit Card 

The credit score plays a crucial role in getting good credit cards and suitable loan options. However, it is not the only factor. Other aspects like age, income, employer, nature of job, etc. Your credit score could be good, but it will not be the deciding factor. 

Getting Married will Merge Your Scores

Credit scores are determined by the individual’s financial behavior and are assigned to an individual. Getting into wedlock will not result in the merger of credit scores. Holding joint bank accounts will not alter anything with respect to your credit history and score.


Credit score building and repairing will not happen overnight. Financial discipline is required to get a good credit score and also to maintain it. However, before taking the appropriate steps, it is essential to know the myths around a credit score. 

Buz Business is a business-focused website, we cover business-related topics that can help you get specific information. BuzBusiness was founded in April 2021.

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