Your credit score can open or close doors to new credit cards, home loans, car financing, and the best interest rates. Yet, despite how important these three digits are, credit scores—especially FICO scores—remain wrapped in myths and confusion.
Let’s pull back the curtain. Get ready to debunk the most common credit score myths, find out what actually shapes your FICO score, and get actionable tips for a stronger financial future.
Understanding the FICO Score: The Foundation of Your Credit Life
Before we start busting myths, let’s get clear on what a FICO score actually is. FICO, short for Fair Isaac Corporation, is the credit scoring model used by over 90% of major lenders in the United States. Your FICO score ranges from 300 to 850 and tells lenders how likely you are to repay borrowed money on time.
The higher your score, the better your chances of loan approval and snagging lower interest rates. But what exactly determines those three digits? And more importantly, what doesn’t?
The Five Key Factors That Shape Your FICO Score
FICO scores aren’t magic—they’re math. Here’s what really matters, with each category’s typical influence on your score:
- Payment History – 35%
- Amounts Owed (Credit Utilization) – 30%
- Length of Credit History – 15%
- New Credit – 10%
- Credit Mix – 10%
Next, let’s bust some of the top credit score myths so you know what truly impacts your financial standing.
Credit Score Myths Busted
Myth 1: Checking Your Own Credit Score Lowers It
Truth: Many people believe that simply checking their credit report or score will damage their credit. This is not true. When you check your own credit, it’s called a “soft inquiry” and has absolutely zero effect on your score.
By contrast, when a lender checks your credit as part of a loan or credit card application—a “hard inquiry”—your score may dip slightly, but not when you do it yourself.
Tip: Feel free to check your credit report regularly. It’s good financial hygiene and doesn’t hurt your score at all.
Myth 2: A High Income Means a High Credit Score
Truth: Your salary has no direct effect on your credit score. Credit bureaus don’t include your income on your credit report, so it’s not part of the FICO math.
Lenders may ask about income when you apply for credit, since it helps gauge your ability to repay, but your FICO score relies strictly on your borrowing and repayment history—not your paycheck.
Myth 3: Closing Old Credit Accounts Will Improve Your Score
Truth: Closing an old, unused credit card might seem harmless, but it can actually hurt your FICO score. Why? Two reasons:
- The account’s history gets shorter, lowering your average account age (which hurts the “length of credit history” factor).
- It reduces your total available credit, which can increase your credit utilization ratio (bad for your score).
It’s usually better to keep old accounts open, even if you don’t use them regularly.
Myth 4: Having More Credit Cards Hurts Your Score
Truth: Simply possessing multiple credit cards won’t tank your FICO score. In fact, responsible management of several cards—keeping balances low and paying on time—can demonstrate solid credit handling.
What matters more is your credit utilization (how much of your available credit you’re using) and your repayment history. Irresponsibly opening too many new accounts in a short period can hurt, but having multiple cards, in itself, isn’t a negative.
Myth 5: Paying Off Debt Removes It from Your Report Instantly
Truth: Debt repayment is vital for good credit health, but don’t expect quick erasure. Paid-off debts usually stay on your credit report for several years, especially if there were late payments involved.
Positive payment history on closed accounts can help your score, while negative history (like missed payments) can linger for up to seven years.
Myth 6: Your Score Is Ruined Forever After Bankruptcy
Truth: Bankruptcy significantly hurts your FICO score, but its impact is not permanent. Chapter 7 bankruptcies fall off your credit report after 10 years, while most other negative items disappear after seven. As you rebuild—by paying bills on time and keeping balances low—your score can improve, even before the bankruptcy fades from your report.
Myth 7: Your Spouse’s Credit Score Automatically Affects Yours
Truth: When you marry, your credit histories remain separate. Your spouse’s score only impacts you jointly if you apply for a loan or credit card together; otherwise, your FICO scores are independent.
Myth 8: Only One Credit Score Matters
Truth: You actually have dozens of credit scores, not just one. While the FICO score is the most widely used, lenders may use different versions or scoring models, and the information at each credit bureau can differ slightly.
It’s smart to monitor all three major bureaus’ reports—Equifax, Equifax, and TransUnion—periodically to ensure accuracy.
What Really Impacts Your FICO Score? A Closer Look at the Five Key Factors
Let’s dig into each element that goes into your FICO score, so you can see how your actions affect your rating—and steer clear of what doesn’t matter.
1. Payment History (35%)
The single biggest factor in your FICO score is your track record of making payments on time. This includes credit cards, mortgages, installment loans, and other debts.
- Missed or late payments, defaults, collections, and bankruptcies all significantly lower your score
- Consistently paying on time builds a positive score over time
2. Amounts Owed / Credit Utilization (30%)
This is about how much revolving credit you’re using, compared to your available limit.
- Keep your credit utilization ratio below 30% for best results. For instance, if your credit card limit is $10,000, try not to carry a balance of more than $3,000 at any time.
- High utilization (maxing out cards!) will severely dent your score, even if you’re paying on time
3. Length of Credit History (15%)
Lenders love to see a long track record of responsible use.
- The age of your oldest account, newest account, and the average age of all accounts all matter
- Closing old accounts can shorten your history and hurt your score
- If you’re new to credit, focus on the other factors and your history will grow
4. New Credit (10%)
Applying for lots of new credit in a short period can temporarily lower your score.
- Every hard inquiry (when lenders check your credit after you apply for a new loan or card) may nudge your score down a little
- Multiple applications for the same type of loan (like mortgages or car loans) within a short time frame are usually treated as one inquiry to allow you to compare rates without penalty
5. Credit Mix (10%)
FICO scores reward you for successfully handling different types of credit accounts:
- Revolving accounts (credit cards)
- Installment loans (personal loans, mortgages, auto loans)
- Retail or finance company accounts
A healthy, diverse credit mix, combined with responsible payments, shows lenders you can juggle different types of debt responsibly.
What Does Not Affect Your FICO Score?
Equally important is knowing which things do not affect your FICO score:
- Income level: Your paycheck matters to lenders, but it’s not a factor in FICO scoring.
- Age, gender, race, marital status, or where you live: FICO never considers personal information unrelated to credit behavior.
- Employment status: While lenders ask about your job, it’s not part of your credit report.
- Checking your own credit report: This is a “soft pull” and will never hurt your score.
- Debit card activity or paying with cash: Only credit transactions are reported.
How to Boost Your FICO Score: Actionable Tips
If you want to move your score higher, focus on the basics:
- Pay all bills and credit obligations on time, every time
- Keep your credit card balances low—under 30% utilization, less is even better
- Don’t close old cards needlessly
- Avoid opening too many new accounts at once
- Maintain a healthy mix of credit types if possible
Regularly review your credit reports for errors. If you spot inaccuracies—like accounts you didn’t open or payments marked late that you made on time—dispute them with all three credit bureaus. A clean, accurate report means a healthier score.
Conclusion: Knowledge Is Power—Don’t Fall for Credit Score Myths
The right information can save you money, protect your financial reputation, and open doors to life’s opportunities. Now that you know the truth about what actually affects your FICO score, you’re prepared to take control, avoid costly mistakes, and build a bright financial future.
Ready to take charge of your financial destiny?
Start by reviewing your credit reports, making on-time payments, and keeping your credit utilization low. Break free from the myths, take the right steps, and watch your FICO score—and financial potential—rise.