USC Credit Union Blog

USC Credit Union Blog

5 Common Credit Score Myths Debunked

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Ever wonder what your credit score really means or what factors truly weigh on that three-digit number? If your answer is yes, you're not alone! Your credit score is the first thing people will check when you apply for a loan, a line of credit, an apartment or a home loan--yet there are several misconceptions and myths leading to widespread confusion about what actually impacts your score. Here are five of the most common credit score myths, debunked: 


Myth #1: Checking your credit score will cause it to drop 

Checking your own credit score will not affect your score because it's a "soft inquiry." You can check your credit score at as often as you want without hurting your score. When you apply for a loan, the lender will do a "hard pull" on your credit, which usually has a small effect on your credit score.


Myth #2: You only have one credit report and only one credit score

While your score is usually consolidated into one number when you check your credit score, you actually have scores from three major credit bureaus, Transunion, Experian and Equifax. In addition, there are also different ways to calculate your credit score. FICO and VantageScore are the main companies that calculate scores. Learn more about VantageScore in a previous USCCU blog post!


Myth #3: You need to carry a balance and pay interest to build credit 

Some people believe you need to carry a balance to show lenders you're using credit, but doing so could result in you paying unnecessary interest and could hurt your credit score by increasing your credit utilization rate. Credit utilization is the amount of available credit you use in relation to your credit limits, and it's recommended that you keep this below 30%. 


Myth #4: Closing accounts will improve your credit health

Closing a credit account can actually hurt your score in two ways. Because credit history is a credit factor and lenders like to see a long credit history, closing an old account can shorten your credit history and lower your score. Additionally, closing a credit card will lower your overall available credit, which can impact your credit utilization rate. 


Myth #5: People who earn high incomes are wealthy and always have high credit scores

Your income and personal wealth have nothing to do with your credit score. Your score is all about how you manage your debts, regardless of how big or small. The only way a bank account can affect your score is if you bounce checks and the balance owed gets turned over to a collection agency. 

If you like learning about these common credit score myths, check out this FREE resource through USC Credit Union. Greenpath has provided learning labs for USC Credit Union members to continue becoming more financially literate!

Greenpath Learning Labs

For Our Members – Not For Profit 

When you became a member of USC Credit Union, you took a big step toward your financial success. As a not-for-profit, our earnings are returned to you in the form of lower loan rates and lower fees. So while banks pay stockholders first, we put you first. With USC Credit Union, your future starts today and we want you to own it!


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