Internet is cluttered with great deal of misinformation surrounding credit scores in the USA, especially among consumers who are just discovering the world of financing and credit cards in the country. Strictly speaking, credit scores are a numerical representation taken into account by lenders to determine your ability to pay and the risk involved in lending you money.

This article highlights 10 myths you should know about credit scores, so you understand exactly how it works and what you should do to increase the score (or what has happened to make it go down).

1- Do you lose point after checking credit score online?

No, checking your credit score online will not cause you to lose points, because this type of review is considered a “soft inquiry,” which has no impact on your credit reports.

However, when you are going to apply for a loan or a credit card, it is likely that the issuer of the financing will conduct a “hard inquiry”, which will cause you to lose some points or lower your credit score.

2- Will having high balances make my credit score improve?

Although it is true that using your credit cards is must to have higher credit scores, the truth is that having high balances each month will not make your credit score go up.

On the contrary, high balances can actually hurt your credit score.

3- Will your credit score increase when your income increases?

No, your credit score will not increase if your income increases.

The six components that make up a credit score are:

1. Payment history
2. Percentage of credit limit used
3. Debt
4. Credit history and mix
5. Recent credit behavior
6. Available credit amount

4- If you get married, will you and your spouse have a joint credit score?

Strictly speaking, there are only individual credit scores, regardless of whether you are married or not.

While it is true that joint bank accounts exist, the movements in these accounts will affect each account user individually.

In other words, your credit score will never be “mixed” with your spouse’s.

5- Will paying off my auto loan help improve my credit score?

Not necessarily. In fact, any loan paid off on your credit report can cause a stagnation or a small loss of points, as the financing will be reflected as a closed account on your credit report, as paradoxical as it may seem.

On the other hand, an open account on your credit report can have a positive impact on your credit score.

6- Can you use debit card to boost credit score?

Regular use of your debit card, in general, is the closest thing to using cash in the United States. Therefore, it will not have a direct impact on your credit score.

7- Will having a mortgage negatively affect my credit score?

There is no clear answer on this topic, because it depends on the timing of the mortgage application.

Initially, at the time you apply for a mortgage, your credit score may drop a bit because the lender will conduct a “hard” credit check. However, over time, and if you make the right payments at the right time, a mortgage may help boost your credit score.

8- Does a credit score really matter?

The short answer is: YES. The higher your credit score, the better interest rates you can get on the financing, loans and credit cards you apply for.

In fact, there are loans that you simply won’t be able to access if you don’t have an optimal credit score.

9- Applying for many credit cards at the same time won’t affect my credit score, will it?

Every time you apply for a credit card or financing, lenders will conduct a “hard check” on your credit report. Therefore, it is possible that they will negatively affect your credit score. Therefore, it is not true that applying for several credit cards at once will not affect your credit score.

10- Will canceling my credit cards that I don’t use much make my credit score improve?

Not necessarily, since closing your credit card accounts can cause your available credit to decrease, which will negatively affect your credit score. Likewise, you will not benefit from the payment history of the closed credit card.

Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].