Your credit score shapes major financial decisions, yet most people don't fully understand how it works. The result? A lot of myths worth clearing up. Here's what you actually need to know.
Checking your own credit score is a soft inquiry and has absolutely no impact on your score. You can check it as often as you like.
What does affect your score is a hard inquiry, which happens when a lender pulls your credit after you apply for a loan, credit card, or mortgage. Even then, the impact is typically small (usually fewer than five points) and temporary.
So go ahead and monitor your score regularly. It's one of the best habits you can build. USALLIANCE Digital Banking offers daily score updates, detailed reports, and instant alerts for important changes.
You actually have dozens of credit scores. The three major credit bureaus — Equifax, Experian, and TransUnion — each maintain their own version of your credit file. Lenders may report to one, two, or all three bureaus, so your score can differ across them.
On top of that, there are multiple scoring models. FICO alone has over 50 versions, and VantageScore is another widely used model. Mortgage lenders may use different versions than credit card issuers.
The practical takeaway: focus on building good credit habits rather than obsessing over a single number.
This one is surprisingly common, and completely false. You do not need to carry a balance (and pay interest) to build credit. What matters is that you use your card and pay your bill. Lenders report your account activity to the bureaus regardless of whether you pay in full each month.
Carrying a high balance can actually hurt your score by raising your credit utilization ratio — the percentage of your available credit that you're using. Keeping that below 30% is generally recommended, and below 10% is even better.
Pay your balance in full each month whenever possible. Your credit score (and your wallet) will thank you.
Closing old accounts can actually lower your score in two ways: it reduces your available credit (raising your utilization ratio), and it can shorten your credit history, since the average age of your accounts is a factor in your score.
If a card has an annual fee you no longer want to pay, closing it may be the right financial decision. But if it's a no-fee card you rarely use, keeping it open — even with minimal activity — is usually better for your credit profile.
Your income is not a factor in your credit score. Scores are calculated based on your credit behavior: payment history, amounts owed, length of credit history, credit mix, and new credit. How much money you earn doesn't appear in any of those categories.
That said, income does matter when lenders make lending decisions. They look at your debt-to-income ratio separately from your credit score when evaluating whether you can afford to repay a loan.
Credit scores are dynamic, not fixed. They change every month as new information is reported. Most negative marks — including late payments, collections, and high balances — have a diminishing impact over time and fall off your credit report entirely after seven years (bankruptcies after ten).
People have rebuilt credit scores from the 500s to the 700s within a few years through consistent, responsible habits. It takes patience, but recovery is absolutely possible.
Understanding how credit scores actually work puts you in control. The fundamentals are straightforward:
Your credit score isn't a judgment of your worth as a person. It's a tool, and like any tool, it works best when you understand it.