10 credit score myths debunked

There are almost too many myths or incorrect information around how your credit reports and how credit scores actually work. This is largely due to the fact that these subjects can get complicated, and things change over time. Let’s get down to brass tacks about these seriously incorrect myths around your credit score.

10 myths about your credit score

Knowing the truth behind these credit score myths can help ease your worries about what impacts your credit score, what doesn’t have an affect and what actually matters.

1. Getting married affects your credit score

You might have tied the knot, but you and your spouse’s credit scores don’t merge. Marital status is not a factor in your credit score. What may happen, however, is that your credit histories start to look similar if you share a mortgage, credit cards or other loans.

2. Divorce harms your credit score

Just like getting married, getting divorced doesn’t automatically harm your credit score. This myth comes out of how assets and loans are split because of the divorce and how people often experience a drop in their credit score afterward — but correlation doesn’t equal causation.

For example, if you had a mortgage with your spouse, but they got the house and became solely responsible for the home loan, that account would be removed from your credit reports and potentially harm your credit score. You’re no longer receiving on-time payments from the mortgage, you’ve reduced your credit mix and possibly reduced the average age of your reported accounts.

The bottom line is that your credit reports and scores don’t care if you’re single or married — it has everything to do with what accounts are reported.

3. Good credit = financially stable

Just because you have a squeaky-clean credit history and a good credit score doesn’t mean you’re financially stable. Your credit history doesn’t include your income, savings or living situation — all factors in your overall financial health.

“A credit score can tell you that you’re paying your loans and lines of credit as agreed,” says Bruce McClary, a spokesperson for the National Foundation for Credit Counseling (NFCC). “But it is not an indicator of whether or not you’re financially stable in a broader sense. It can’t tell you whether or not you have enough money in savings to overcome any unexpected financial challenges.”

You can still brag about your great credit score to relatives and friends, but make sure you have safeguards in place such as an emergency fund to cover unexpected events.

4. Partial payments appear as “on time” payments

Just because you paid some of your owed amount doesn’t mean you’ll get credit for an on-time payment. If you make a partial minimum payment on a loan on the due date, there’s a good chance it will be reported late. Most lenders require you to make the minimum payment by the due date for it not to be considered late.

5. You only have one credit score

This is simply not true. The two most popular credit scoring models are FICO and VantageScore. These credit scoring models use the information on your credit report to generate a three-digit number between 300 and 850. Truthfully, you could create your own credit scoring model, and so can other companies, but the ones that lenders use to determine your creditworthiness are the ones you need to be worried about.

Most lenders refer to the FICO 8 credit scoring model, and there are also the FICO 9 and FICO 10 Suite models. So while your FICO 8 score is likely the most important score to know because it’s the one lenders are likely to see when you apply for new credit, it’s not your only credit score.

6. Checking your credit score lowers it

Nope! Feel free to check your credit score as often as you like, because it won’t lower your score at all. Whenever you review your credit reports or credit score, it’s considered a soft inquiry which has no impact on your overall rating.

In fact, you should check your credit score on a regular basis and scan it for errors, signs of identity theft and making sure your ducks are in a row with your accounts.

7. Utility payments can’t impact your credit score

A half truth, because while most utility companies don’t report your on-time bill payments, there’s a good chance they’ll report your late or missed payments. And if the payments are very overdue — such as 180 days late — it may even be sent to collections.

Missed and late payments can drastically lower your credit score, as much as 100 to 180 points if you have a good credit score. Accounts in collections can also harm your credit score, possibly dropping it around 100 points per collection account.

8. Medical bills aren’t reported to credit reports

A little more complicated, but the short answer is that medical bills can impact your credit score. It’s true that most physicians, hospitals or healthcare providers don’t automatically report medical bills, but it’s a similar answer to utility bills. There’s a chance a medical bill could be sent to collections or your late payments can be reported.

However, as of July 2022, medical debt under $500 is not reported to any of the three credit bureaus.

9. Paying off bad debts removes them from your credit report

Unfortunately, this myth is completely false. Paying off a charge-off, late payment or collection account doesn’t remove it from your credit reports. Negative marks like this remain on your credit reports for up to seven years, and if they’re correct, there’s nothing you can really do to remove them.

10. Closing old accounts can improve your credit score

The opposite is true, in most cases. FICO has a category called length of credit history, making up 15% of your credit score. It considers the average age of all your active accounts. By closing an old account, it can actually decrease your credit score.

Knowledge is power

With rules and credit scoring models changing how they do things all the time, it’s no wonder there’s so many myths about credit scores. And with all this confusion, it can be difficult to get on the right track to credit repair — see how to build credit for more information and guidance.