Your credit score is one of the most important numbers in your financial life. It affects your ability to get loans, credit cards, favorable interest rates, and even impacts long-term financial opportunities. Yet, despite its importance, credit scores are often misunderstood. Many people unknowingly follow incorrect advice or believe myths that can seriously damage their credit profile.

In India, where awareness about credit scoring is still growing, these myths can lead to poor financial decisions and long-term consequences. Let’s break down the top 10 credit score myths and uncover the truth behind them so you can protect and improve your financial future.

Myth 1: Checking Your Credit Score Lowers It

This is one of the most common and damaging myths. Many people avoid checking their credit score because they fear it will reduce their score.

The truth:
Checking your own credit score is considered a soft inquiry, and it does not affect your credit score at all. In fact, regularly checking your credit report helps you detect errors, fraud, and negative trends early.

Myth 2: Income Determines Your Credit Score

A common belief is that a higher salary automatically means a higher credit score.

The truth:
Your income has no direct impact on your credit score. Credit bureaus do not consider how much you earn. Instead, your score depends on how responsibly you manage borrowed money—such as paying EMIs on time and maintaining low credit utilization.

Myth 3: Closing Old Credit Cards Improves Your Credit Score

Many people close old or unused credit cards assuming it will make their credit profile “cleaner.”

The truth:
Closing old credit cards can actually lower your credit score. Older accounts contribute to the length of your credit history and help keep your credit utilization ratio low. Closing them shortens your credit history and may increase utilization.

Myth 4: Paying the Minimum Due Is Enough

Some borrowers believe that paying only the minimum amount due on a credit card is sufficient for maintaining a good credit score.

The truth:
While paying the minimum due prevents late payment penalties, it keeps your credit utilization high and increases interest costs. High balances can negatively impact your credit score over time. Paying the full balance is always better.

Myth 5: You Need to Be Debt-Free to Have a Good Credit Score

Many people think that having no loans or credit cards means they have an excellent credit score.

The truth:
Having no credit history or minimal credit activity can actually make it difficult for lenders to assess your reliability. Responsible use of credit, not avoiding it completely, helps build a strong credit score.

Myth 6: Settling a Loan Is the Same as Paying It in Full

Loan settlements are often seen as an easy way out of debt without consequences.

The truth:
Settled accounts are marked as “settled” rather than “closed” on your credit report. This indicates incomplete repayment and negatively impacts your credit score. Full repayment is always better than settlement.

Myth 7: Credit Score Improves Overnight

Some people expect quick fixes and instant improvements after making one payment or disputing an error.

The truth:
Credit score improvement takes time. While correcting errors or reducing balances can show results within a few weeks, building strong credit requires consistent positive behavior over months or even years.

Myth 8: Multiple Loan Applications Don’t Matter If You’re Eligible

Many borrowers apply to several banks at once, assuming eligibility guarantees approval without consequences.

The truth:
Each loan or credit card application results in a hard inquiry, which can lower your credit score. Multiple inquiries in a short period signal financial stress and can reduce your chances of approval.

Myth 9: Only Banks Can Affect Your Credit Score

Some people believe that only banks and large financial institutions influence credit scores.

The truth:
NBFCs, fintech lenders, BNPL platforms, and even some mobile finance apps report to credit bureaus. Missed payments on these platforms can also damage your credit score.

Myth 10: Bad Credit Is Permanent

Perhaps the most harmful myth is believing that once your credit score drops, it can never be fixed.

The truth:
Bad credit is not permanent. With timely payments, reduced debt, corrected errors, and disciplined financial habits, your credit score can improve steadily over time.

Why Believing These Myths Can Hurt Your Financial Future

Falling for credit score myths can lead to:

• Loan rejections

• Higher interest rates

• Limited access to credit

• Increased financial stress

A poor understanding of credit can trap you in a cycle of bad decisions that take years to correct.

How to Protect and Improve Your Credit Score

To avoid these myths and build a strong credit profile:

• Check your credit report regularly

• Pay all dues on time

• Keep credit card usage below 30%

• Avoid unnecessary credit applications

• Maintain a healthy mix of credit

• Seek professional guidance if needed

Conclusion

Credit score myths can silently damage your financial future if left unchallenged. From believing that checking your score hurts it to thinking that bad credit is permanent, these misconceptions often lead to poor financial decisions. Understanding how credit scores really work empowers you to take control of your finances.

By separating fact from fiction and adopting responsible credit habits, you can protect your credit score, improve loan eligibility, and secure better financial opportunities. Remember, your credit score is not just a number—it’s a reflection of your financial discipline and a key to long-term financial success.