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Here Are Some Common Misconceptions That Most People Experience About Credit Score


A Credit score is a detailed description of the credit history of an individual; it can range from 300 to 850/900. A high credit score means fewer financial problems in terms of easy loan availability or being approved for a credit card with a high limit – or even help getting a credit card loan from SoFi or other providers. There are plenty of misconceptions about credit scores, but to get your score right, you should be able to differentiate between fact and fiction.

Common Misconceptions about credit scores and the truth about them

Here are some common misconceptions and credit score myths that have been debunked.

1. If I check my credit score frequently, it lowers my credit rating.

This is probably one of the most common myths that monitoring your score can have an impact on the score. Proper scrutiny and tracking of your credit score help you track progress when building credit, and it should be checked in the right way.

2. My credit score improves if I carry a balance on my credit card.

Carrying a balance on your credit card doesn’t help your credit score; in fact, it further deteriorates it. Keeping a balance on the credit card directly affects your credit card utilisation rate. Moreover, it has the potential to end up becoming expensive over time, paying interest. Paying off your credit card bill in full each month, can be beneficial and helps you save money in the long run. You can learn more about how you can fix your credit in Canada, or other countries through various online articles, blogs and videos about the same.

3. Everyone starts with a perfect credit score.

A misconception among people who try to establish credit for the first time is the feeling that they start with the highest credit score. This is false.

If you’ve never had a loan or applied for a credit card, the chances are that you won’t have a credit score at all. An established credit score is necessary when applying for small loans, securing a credit card, and even applying for student loans.

4. My income and other personal details impact my credit score.

This is False. Your salary and income are not your potential credit risk, but they are simply considered as your potential capacity to pay bills. Variables affecting credit scores include your payment history, rate of utilisation, length of credit history, application of new credit, and the variety of credit products you possess.

Just as your income doesn’t affect your credit reports, your demographic information, race, sexual orientation, disabilities, national origin, profession, religion, or military veteran status has no impact on your credit scores.

5. A credit repair company can help me build up my credit scores.

A “credit repair” company cannot do much for you that you can’t do yourself. Reputable credit establishing services can assist you with a plan to repay your debts, but practically all you need is good credit management which can easily be done by yourself.

6. A good credit score means you’re rich.

This is false. A good credit score is just a measure of your risk. Having good sources of income doesn’t mean that you have a higher line of credit.

Yes, if you pay your dues on time, you may see an increase in your credit limit, which could be positive for your credit utilisation ratio.

7. A perfect credit score is highly beneficial for me.

False again. Although it’s a matter of great pride to be a part of the elite 850 or 900 credit score club, there are no additional benefits of having a perfect score. There is no extra benefit of finance availability for people with a perfect score.

8. There is only one credit rating agency.

There could be multiple credit bureaus depending on the country you reside in that feature credit reports for consumers with established credits. These companies are relatively the same on each platform but can generate different reports with variants in a few points if it has unique information. For example, the experian credit report may vary from credit reports created by other agencies.

9. Credit Score is the sole determinant of a person’s potential to secure credit:

There is a common misconception that credit score is the only criteria that determine an individual’s ability to secure a new or add-on credit. Although it an important parameter but it, not the only determinant that lenders look at when making financial decisions. There could be other factors involved like your employment, paying capacity, debt to income ratio, etc., which are also taken into consideration while lending money to a person.

10. I should not worry about my credit score till I’m older.

Age matters and your credit rating can start at the early age of 18. That is exactly when you should start worrying about maintaining your credit score. The length of your credit history matters a lot to maintain your credit score, so the sooner you establish credit, the better.

11. Paying off a debt increases your credit score.

This can be both true and false. If it’s in the case of a credit card debt, it is true but not in the case of instalments or EMIs paid towards a loan, mortgage, or even a student’s loan. If you pay off your loan in full, it can hamper your credit score as it means having fewer credit accounts.

12. My employer can see my credit score.

When it comes to applying for a new job, many people often think prospective employers can see and consider their credit score. While many employers can retrieve your credit report, but they don’t have access to your actual credit score. The goal of looking at your credit history by the employer is to analyse any signs of financial distress, but it rarely affects your chances of getting a job.

13. A Bad Credit Score Lasts Forever

A credit score represents your financial past, but it doesn’t mean that it will stay with you for a lifetime. If you make a habit of following good tips and practices, you can create a good score and let the past bad transactions fade away. Furthermore, if you wanted to start a business but you were worried about your credit score then there are places like Easy Pay Direct that are able to create a high-risk merchant account for people who don’t have as good credentials as perhaps other people.

14. Student loans don’t affect my credit score.

False. Your credit score is affected by the way you manage the payment of student loans and other expenses like paying your bills on time, mortgage, and any medical bills you might have.

15. My credit score will merge with my spouse’s credit score after I get married.

Credit reports always stay individual, even when you get married, your credit report stays unique to you and only you. Even if applying for new credit with your partner in a joint agreement, individual credit scores of each are considered.

16. You’re not responsible for accounts you’ve guaranteed or cosigned.

If you have a friend, child, or a partner for whom you have guaranteed or cosigned to get a loan approved for him, you also agree to pay back the loan if the person you gave the guarantee for, fails to do so. A failure on the same may negatively impact your credit score as well.

17. Bankruptcy “reinitiates” your score.

Bankruptcy means that an individual initiates a repayment plan to pay back creditors over three to five years. Filing for bankruptcy does not mean that your credit score is restored. Nonetheless, if you should file for bankruptcy, you might need to be mindful that it can stay on your credit report for 10 years from the day it was filed.

18. If I use my debit card instead of my credit card, it will build a good credit score.

This is entirely false as Debit and credit cards are two different things. A debit card is not a form of credit, so it does not affect your credit report.

19. You can get access to the exact credit rating and report your lender can see

A credit rating agency provides a detailed version of a credit report to a lender, whereas an individual may receive a concise credit report with only a few relevant details.

20. Applying for a New Credit may be detrimental for your Credit Score.

Applying for a credit facility from a trusted lender’s office will not hurt your score, but continuous attempts of applying for various credit cards and getting rejection may negatively affect your rating.

21. Disputing Credit Report Information may enhance Your Credit Score

You can dispute any financial or reporting errors you find in the credit report and ask the company for a correction. However, the raised dispute may not have any impact on your credit score, especially if it is about a correction in date of birth, name, address, or other personal details. If the dispute is regarding a financial transaction, the credit score will be impacted once the error has been rectified.


Forget everything you’ve heard about credit rating so far. You should be willing to rethink what you know about credit scores, as it is simply a tool that measures the paying capacity and the way you deal with your debts.



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