There are several myths surrounding credit scores. Here are some of the most common:
Closing a credit card account will improve your credit score: This is actually not true, as closing a credit card account can actually hurt your credit score. This is because it can lower your available credit and increase your credit utilization ratio, which is a key factor in determining your credit score.
Checking your credit score will hurt your credit: This is not true, as checking your own credit score is considered a "soft inquiry" and does not affect your credit score. However, if a lender or creditor checks your credit score, it will be considered a "hard inquiry" and can temporarily lower your score.
Your income affects your credit score: Your income is not a factor in determining your credit score. Your credit score is based on your credit history, including your payment history, credit utilization, length of credit history, types of credit, and recent credit inquiries.
You have only one credit score: This is not true, as there are multiple credit scoring models and each may produce a different score. The most commonly used credit scoring model is the FICO score, but there are also other scoring models, such as the VantageScore.
Paying off a debt will immediately improve your credit score: While paying off a debt is a positive step, it may not immediately improve your credit score. Your credit score is based on your credit history, so it may take some time for your credit score to reflect the positive change.
It's important to be aware of these credit score myths and to educate yourself on how your credit score is calculated, so that you can take the necessary steps to improve your credit score.