Three Credit Score Myths That Could Be Costing You Money

Bad credit advice is everywhere — and it can cost you real money

Search "how to improve my credit score" and you'll find thousands of articles, videos, and social-media posts. Some are excellent. A surprising number are flat-out wrong. Acting on bad advice can lead to higher interest rates, rejected applications, or months of unnecessary credit repair.

Here are three myths that trip up American consumers — and what the data from FICO® and the Consumer Financial Protection Bureau (CFPB) actually says.

Myth 1: "Checking my own credit report hurts my score"

False. Completely. This myth is everywhere, and it stems from confusing two entirely different things.

When you check your own credit — through AnnualCreditReport.com (the federally authorized free site), your credit card issuer's dashboard, or a credit monitoring service — that's a soft inquiry. Soft inquiries have zero impact on your credit score. You can check daily and your score won't budge.

What can affect your score is a hard inquiry: when a lender pulls your report because you applied for credit. Even then, a single hard inquiry typically impacts your score by less than 5 points according to FICO, and the effect fades within a few months. Multiple hard inquiries in a short window are what signal risk.

The CFPB recommends checking your credit reports at least once a year — and more often if you're planning a major purchase. Knowing what's on your report is responsible financial behavior, not a risk.

Myth 2: "Closing old credit cards helps my score"

Usually the opposite. Closing an old credit card can hurt your score in two ways:

• Credit age: The age of your oldest account and the average age of all your accounts factor into your score (15% of FICO®). Closing a card you've held for years shortens your average account age — especially if it's one of your oldest accounts. (Note: closed accounts in good standing can stay on your report for up to 10 years, so the impact may be delayed rather than immediate.)
• Credit utilization: This is the percentage of your available credit that you're using — and it's the second-biggest factor in your score (30%). Closing a card reduces your total available credit, which can spike your utilization ratio overnight. If you had a $5,000 limit on a closed card and $3,000 in balances across your other cards, your utilization just jumped from 30% to 60%.

When closing makes sense: if the card has a high annual fee you're not recouping through rewards, or if the card is a temptation you want to eliminate. For a no-fee card with history, keeping it open — even if you never swipe it — is almost always better for your score.

Myth 3: "I don't need to think about my credit until I'm applying for a mortgage"

Build credit before you need it. Your credit score isn't something you can sprint the month before a home purchase. It's built — or damaged — over time through consistent habits:

• Landlords check credit before approving lease applications — a strong score gives you options in competitive rental markets.
• Employers in finance, government, and other sectors may review credit as part of background checks (always with your written consent, per FCRA).
• Auto insurers in most states use credit-based insurance scores to price your premium.
• When you do apply for a mortgage, the difference between a 680 and a 740 FICO® Score can mean tens of thousands of dollars in interest over 30 years.

The right approach: check your credit reports annually at AnnualCreditReport.com, pay every bill on time, keep your credit utilization below 30% (ideally below 10%), and consider adding positive tradelines — like rent reporting — to build a thicker credit file over time.