Myth #1: Checking your own credit score lowers it

Many people avoid checking their credit score because they fear it will cause their number to drop. This myth likely stems from the fact that when lenders check your credit (known as a “hard inquiry”), your score can temporarily decrease by a few points.

Fact: Checking your own credit has zero impact on your score

When you check your own credit score, it’s considered a “soft inquiry” that has absolutely no impact on your credit score. In fact, regular monitoring of your credit is a recommended financial habit that helps you stay informed about your financial standing and catch potential errors or fraud early.

Credit bureaus like Experian, Equifax, and TransUnion clearly distinguish between consumer-initiated checks (soft inquiries) and lender-initiated checks (hard inquiries) when calculating scores. You can check your score daily if you want without any negative consequences!

Myth #2: A higher income means a higher credit score

It seems logical that earning more money would result in a better credit score. After all, with more income, you should be able to pay your bills more easily, right?

Fact: Income doesn’t appear on your credit report and isn’t factored into your credit score

Your income is not reported to credit bureaus and is not considered in credit score calculations. Credit scores are based on your borrowing behavior, not how much you earn. This is why people with modest incomes can have excellent credit scores while high-income individuals can have poor scores.

What matters is how you manage the credit you have—making payments on time, keeping balances low relative to credit limits, maintaining a long credit history, having a good mix of credit types, and applying for new credit only when necessary.

Myth #4: You need to carry a balance on your credit cards to build credit

This is perhaps one of the most costly myths in personal finance. Many people believe they need to maintain a balance on their credit cards and pay interest to build a good credit score.

Fact: You can build excellent credit without ever paying a penny in interest

Credit scoring models don’t consider whether you carry a balance or pay in full each month. They only look at factors like your payment history, utilization rate, and credit mix. What truly matters is:

• Using your credit cards regularly
• Keeping your utilization rate low (under 30%, ideally under 10%)
• Making at least the minimum payment on time, every time

The best strategy is to use your credit cards for regular purchases and pay the statement balance in full each month before the due date. This approach helps you build credit while avoiding interest charges completely.

Credit card companies report your payment history and balance to the credit bureaus regardless of whether you carry a balance from month to month. Carrying a balance only results in unnecessary interest charges that can add up to thousands of dollars over time.

“I’ve maintained an 800+ credit score for years and have never carried a balance on my credit cards. Paying interest doesn’t help your score—it just costs you money.”

Myth #5: You can’t build credit without a credit card

Many people believe credit cards are the only way to establish and build credit, creating a catch-22 for those who can’t qualify for traditional credit cards.

Fact: Multiple pathways exist to build credit without traditional credit cards

While credit cards are one efficient way to build credit, they’re not the only option. Alternative methods include:

1. Secured credit cards: These cards require a security deposit that typically becomes your credit limit. They function like regular credit cards and report to credit bureaus. As your credit improves, you can often upgrade to a traditional card and get your deposit back.
2. Credit builder loans: These special loans hold the borrowed money in a secured account while you make payments. After completing the payments, you receive the funds, and the positive payment history helps build your credit.
3. Becoming an authorized user: Being added as an authorized user on someone else’s well-managed credit card can help you benefit from their positive payment history.
4. Reporting rent payments: Services like Rental Kharma and RentTrack can report your on-time rent payments to credit bureaus.
5. Store credit accounts: Some retailers offer credit accounts that may be easier to qualify for than traditional credit cards.

The key is finding reporting methods that work with your financial situation and ensuring those payments are reported to all three major credit bureaus.

Myth #6: Having many credit cards builds credit faster

Some people believe that opening multiple credit cards in a short time will accelerate their credit-building journey by increasing available credit and creating more payment history.

Fact: Quality credit management matters more than quantity

Opening several credit cards at once can actually harm your credit in the short term due to:

• Multiple hard inquiries, which can temporarily lower your score
• Decreased average age of accounts, which affects the length of credit history component
• Potential for missed payments if managing multiple due dates becomes overwhelming

A better approach is to start with one or two cards, manage them responsibly for 6-12 months, and then gradually add new credit products as needed. This measured approach allows you to demonstrate responsible credit management over time.

Focus on consistent, positive credit behavior rather than trying to game the system with quantity. Quality credit management builds a strong foundation that will serve you well throughout your financial life.

Myth #7: Paying the minimum payment is enough to manage credit card debt

Many people assume that as long as they’re making the minimum payment on time, they’re managing their credit card debt responsibly.

Fact: Minimum payments are designed to keep you in debt longer

While making minimum payments will keep your account in good standing and prevent late fees, it’s one of the slowest and most expensive ways to pay off debt. Here’s why:

• Extended repayment time: Minimum payments are typically calculated as a small percentage of your balance (often 2-3%) or a flat amount (like $25), whichever is greater. At this rate, it can take decades to pay off even modest balances.
• Compounding interest: Interest compounds on your remaining balance, meaning you pay interest on interest. This dramatically increases the total cost over time.

For example, a $5,000 balance on a card with 18% APR would take approximately 22 years to pay off if making only minimum payments, and you’d pay about $6,923 in interest—more than the original balance!

Instead, aim to pay your statement balance in full each month. If that’s not possible, pay as much above the minimum as you can afford to reduce both the time to pay off the debt and the total interest paid.

Myth #8: All debt is bad, including credit card debt

Some financial philosophies teach that all forms of debt are negative and should be avoided entirely, placing credit cards in the same category as all other debts.

Fact: Credit cards can be valuable financial tools when used properly

While carrying high-interest credit card debt is indeed costly and best avoided, credit cards themselves aren’t inherently “bad.” When used responsibly, they offer numerous benefits:

• Convenience and security for purchases (better fraud protection than debit cards)
• Build credit history when used responsibly
• Rewards, cashback, and travel benefits
• Emergency access to funds when needed
• Purchase protections and extended warranties

The key distinction is between using credit cards as a payment tool (paying in full each month) versus using them as a high-interest loan (carrying a balance). When used as a payment tool, credit cards can be an asset to your financial life rather than a liability.

Myth #9: Balance transfers are always the best way to tackle credit card debt

Balance transfer offers, especially those with 0% introductory APR periods, are often seen as a magical solution to credit card debt.

Fact: Balance transfers can help, but they’re not always the best solution

Balance transfers can be a useful tool in your debt repayment strategy, but they come with important considerations:

• Transfer fees: Most balance transfers charge a fee of 3-5% of the amount transferred. On a $10,000 balance, that’s $300-$500 upfront.
• Temporary solution: Introductory rates typically last 12-21 months. If you don’t pay off the balance in that time, you could face high interest rates on the remaining balance.
• Credit requirements: The best balance transfer offers typically require good to excellent credit.
• Behavior change: Without addressing the spending habits that led to the debt, you might end up with both the balance transfer card and new debt on the original card.

Balance transfers make the most sense when:

1. You have a concrete plan to pay off the debt during the introductory period
2. The math works out (savings in interest exceeds the transfer fee)
3. You’re committed to not adding new debt while paying off the transferred balance

For some people, a personal loan with a fixed interest rate and structured repayment period might be a better solution, especially for larger amounts of debt or if you need more than 21 months to pay it off.

Myth #10: Checking your credit report will hurt your credit score

Similar to the myth about checking your credit score, many people believe that reviewing their own credit report will negatively impact their credit rating.

Fact: You can check your own credit report as often as you like with no impact

Accessing your own credit report is considered a “soft inquiry” and has absolutely no effect on your credit score. In fact, regularly reviewing your credit report is a recommended financial practice that helps you:

• Identify and dispute errors
• Detect potential identity theft early
• Understand what lenders see when they evaluate your creditworthiness
• Track your progress toward credit goals

By law, you’re entitled to one free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) every 12 months through AnnualCreditReport.com. Additionally, many credit card issuers and financial websites now offer free access to credit reports and scores as a benefit.

Myth #11: Married couples share a credit report

Many people believe that when they get married, their credit histories merge into a single report, with each spouse’s past credit behavior affecting the other’s credit score.

Fact: Credit reports are individual—marriage doesn’t combine them

Credit reports and scores are tied to your Social Security number and remain individual throughout your life, regardless of marital status. Getting married does not create a joint credit report or score, nor does it directly affect either spouse’s existing credit.

However, your financial lives can become connected in several ways after marriage:

• Joint accounts: Any credit accounts you open together (like mortgages, car loans, or joint credit cards) will appear on both credit reports and affect both credit scores.
• Authorized users: If you add your spouse as an authorized user on your credit card, that account may appear on their credit report.
• Community property states: In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), debts incurred during marriage may be considered joint legal obligations, even if only one spouse signed for the debt.

This separation of credit histories means that if one spouse has excellent credit and the other has poor credit, the spouse with good credit won’t see their score drop simply by getting married. However, it also means that a spouse with poor credit won’t automatically benefit from marrying someone with excellent credit.

Myth #12: Negative information stays on your credit report forever

Some people believe that mistakes like late payments, collections, or bankruptcies will permanently damage their credit, making it impossible to recover financially.

Fact: Most negative information has a limited reporting period

Federal law (the Fair Credit Reporting Act) limits how long most negative information can remain on your credit report:

• Late payments: 7 years from the date of the late payment
• Collection accounts: 7 years from the date of the first delinquency that led to the collection
• Chapter 7 bankruptcy: 10 years from the filing date
• Chapter 13 bankruptcy: 7 years from the filing date
• Foreclosures: 7 years from the date of the first missed payment
• Tax liens: Unpaid tax liens can remain indefinitely in some states, though the credit bureaus have recently changed their policies on reporting these
• Hard inquiries: 2 years

As negative items age, their impact on your credit score diminishes, even before they fall off your report. Many people see significant credit score improvements within 2-3 years of serious negative events if they maintain positive credit behaviors during that time.

This time-limited reporting means that no matter how serious your past credit mistakes, you always have the opportunity for a fresh start if you adopt responsible credit practices.

Myth #13: Employers, landlords, and dating partners can check your full credit report without permission

There’s significant concern about who can access credit information and how it might be used against you in various life situations.

Fact: Access to your credit information is legally restricted

The Fair Credit Reporting Act (FCRA) places strict limitations on who can access your credit report and under what circumstances:

• Employers: Employers must get your written permission before checking your credit report, and they generally receive a modified version that excludes your credit score and certain personal details. You also have the right to receive a copy of the report if it’s used against you.
• Landlords: Landlords typically need your permission to run a credit check, though the rental application may include this authorization.
• Insurance companies: Insurers may check your credit information to generate an insurance score, which may affect your premiums.
• Utilities and cell phone companies: These services may check your credit when you open new accounts.
• Dating partners: Individuals cannot legally access your credit information without your express permission and cooperation.

Additionally, credit bureaus must maintain reasonable procedures to verify the identity of anyone requesting a credit report and ensure they have a permissible purpose under the law.