Credit scores can often seem like a mystery. Conflicting information about their calculations and impacts causes much confusion. While they play an important role in your financial future, several myths are often discussed, including how often they are updated, what actually drives down a credit score, and whether looking at your own credit has any effect. Here we outline some common misconceptions about credit scores in order to help you better manage your financial profile.
Myth: Checking Your Credit Will Lower Your Score
A common misconception is that reviewing your own credit report will negatively impact your credit score. Checking your own score is a soft enquiry, meaning it does not affect your score in any way.
A hard enquiry, on the other hand, is when a lender pulls your score to approve you for a loan and may lower your score for a brief period. It is good practice to routinely monitor your credit score. This good habit will help identify errors, detect fraud early, and help keep an eye on changes that may indicate you are having financial problems.
Myth: Closing Old Credit Cards Will Always Raise Your Score
The assumption that closing an older credit card will improve your credit score is another common misconception. The rationale behind this thinking is that if you have fewer accounts, there is less potential risk.
However, closing an old card may shorten your overall credit history and decrease your available credit limit, both of which can lower your score. Unless the card has high fees or poses a real risk for overspending, keeping older accounts open can be beneficial. The length of credit history is one factor that scoring models look at favourably.
Myth: Zero Debt Means a Perfect Score
Paying down all debt is generally a smart move, but having zero debt doesn’t automatically lead to a perfect credit score. Scoring models look at how long you have managed credit. If you have no open accounts, lenders cannot see a consistent history of responsible use and timely payment.
By showing you can carry a balance and make on-time payments consistently, that suggests reliability. If you decide to stay out of debt, just know that your credit score probably will not be as high as someone who keeps low balances and pays on time.
In fact, according to CIBIL, 79 percent of loans are sanctioned to consumers with a CIBIL score greater than 750.
Myth: Your Income Directly Affects Your Credit Score
Many individuals think that a higher salary means a better credit score. While income may come into play in other ways with a lender, income does not factor into the algorithms that determine your credit scores.
Models of credit scores are based on payment history, amounts owed, length of credit history, types of credit and enquiries on your new credit – not income. To be fair, money coming in regularly can help you pay down your debts.
Myth: One Late Payment Ruins Your Score Forever
A single late payment can cause a visible drop, but it does not condemn your score to permanent damage. Time is a major healer.
If you continue to pay on time moving forward, your score will generally improve as the late payment becomes older. Lenders also consider how frequently and severely you have made late payments. One slip might be forgivable if you have otherwise maintained a clean track record.
Myth: Credit Score is the Only Factor in Getting a Loan or Credit Card
While your credit score plays a major role in how lenders perceive you, it’s not the only thing they look at. A strong score might get you through the first filter, but approval depends on multiple factors: your job stability, income level, debt-to-income ratio, the type of loan you're applying for and your existing obligations.
Even something like your residential status or how long you’ve held your current job can tip the scale.
So yes, having a high score opens doors – but it doesn't guarantee a loan. Lenders are still assessing your full financial picture. It’s why some applicants with a score above 750 still face rejections, while others with average scores might get approved due to stable income and low risk.
Myth: Student Loans Don’t Affect Your Credit Score
Many people don’t associate student loans with their credit profile, especially while they’re still studying. But student loans are credit and they do impact your score just like any other EMI-based product.
Payment history on these loans gets reported to credit bureaus. If you miss payments or default on them, it can significantly damage your credit profile—even if you’re not using any credit cards yet.
The flip side is also true. Making regular payments towards your education loan is a great way to build a strong credit history early on. So if you’ve got student loans, treat them with the same seriousness as any other financial obligation.
Myth: A Perfect Credit Score Unlocks Special Benefits
Scoring 850 might feel like the credit equivalent of winning gold at the Olympics, but in reality, it doesn't unlock exclusive perks. Most lenders have score bands, and anything above 780 or so usually qualifies you for their best rates and offers. In other words, there’s no real financial advantage in chasing a perfect score once you’re in the top tier.
Rather than obsessing over perfection, focus on maintaining your score above 770–780 through regular payments, low utilisation and a stable credit mix. That’s more than enough to get you the best cards, loans, and credit limits on offer.
Myth: You Can Ignore Your Credit Score Until You’re Older
A lot of young adults think credit scores are something to worry about “later – once they’re married or earning more. But that delay can cost you. The length of your credit history is a major factor in your score and it takes time to build. The earlier you start managing credit responsibly, the more established your profile becomes.
You can begin small – with a student credit card, a secured card, or even an add-on card on a parent’s account. Paying on time and staying within limits helps set a strong foundation. Waiting until you need a loan to care about your credit is like starting to study the night before an exam – you’ve already missed out on the prep.
Conclusion
Knowing what really lies under the surface of these myths can assist you in making informed decisions about opening and closing accounts, maintaining account balances, or ordering your own credit report. A good credit score is built over time by making payments on time, keeping balances at reasonable amounts, checking for mistakes, and refraining from unnecessary enquiries. Don’t forget to perform a free credit score check regularly to stay on top of your financial health.