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If we think of our credit score as the gatekeeper to the life we’re trying to build, understanding the mechanics is essential.

A higher score can make it easier to get approved for a credit card, car loan, or mortgage, and often lower the interest rates we pay. Over time, this potentially translates into thousands of dollars in savings, money that can instead fuel the goals that matter to us most.

The problem? Many people are operating on bad intel. According to a February Harris Poll conducted on behalf of FICO, there are at least three pervasive myths that can stall financial progress.

So let’s correct the record.

Myth 1: Carrying a balance helps your score

It’s a stubborn misconception that you should keep a small balance on your credit card to show banks you are "using" your available credit. FICO said 72% of those surveyed mistakenly thought this helped their credit score, or were at least confused about it.

The reality is you don’t need to incur debt — meaning pay interest on a balance you carry month to month — to build a strong credit record and score. Although credit scores consider how much available credit you use, paying your balance in full still counts as using your credit card. And you never want to incur interest charges if you don’t have to.

“They’re equating that balance with proof of usage, but credit scores don’t work that way,” said Paul Carlson, a Certified Public Accountant and managing partner at Law Firm Velocity, a legal accounting firm. “Yes, you need to use the card to build credit, but that doesn’t mean you need to accrue debt.”

What’s important for your score is establishing a healthy credit history — showing a lasting track record of responsibly having credit and paying your bills on time.

Myth 2: Your income affects your score

The whole point of credit scores is to measure how responsible you are when you borrow money. And that has nothing to do with how much you’re making. Yet, 2 out of 3 people surveyed wrongly assumed it does.

“No amount of income will improve your score. It’s your financial discipline that will. What counts is how you manage your credit,” Carlson said.

Under this assumption, people with lower incomes may underestimate the influence they actually have over their score. And someone who earns a lot may not appreciate the risks of falling behind on their payments.

Myth 3: Checking your score hurts it

This myth isn’t as prevalent as the first two, but can be just as damaging. Despite what 1 in 5 survey participants assumed, checking your score will never negatively impact it (and it’s free to do.)

“Many people only check their score when they’re about to apply for a loan or credit card. If it drops, it’s typically due to the hard inquiry from that application. But they often assume it’s because they checked their score,” said Carlson.

If anything, not checking can be harmful. You may miss an error on your credit report or fail to spot the red flags that someone has stolen your identity.

Keep in mind: You only risk dinging your credit score if there is a hard inquiry on your credit report (typically because you’ve applied to borrow money.) Soft inquiries — including when you check your own score, or a potential landlord or employer checks your credit — do not.

So what?

These myths aren't just inaccurate; they're a hidden tax on your financial potential. For a gut check on credit scores, go to a primary source like myFICO, VantageScore, or one of the three major credit bureaus: Equifax, Experian, and TransUnion.

And remember, ultimately your credit health relies on a simple premise: consistent, on-time payments and responsible usage.

Related Reading

Fannie, Freddie to Accept ‘Predictive’ Credit Scores, US Officials Say (Reuters via Yahoo Finance)

Build a Strong Credit Score – And Maybe Find Love (SoFi)

Understand Your Credit Score (Consumer Financial Protection Bureau)

¹ Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit consumer.ftc.gov/topics/credit-and-loans.

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