For many, a strong credit score is the stuff that the American Dream is made of. 

Strong credit score is the stuff that the American Dream is made of. Whenever you’re ready to buy a house or take out a loan, you’ve got it. Any time you apply for a lease or you need a new credit card, there’s never a doubt in your mind that you’re going to be approved. 

For many, a strong credit score is the stuff that the American Dream is made of.

But for all the hype and discussion around finding ways to build, maintain, and boost a credit score, people are often confused about the steps that actually need to be taken in order to take your credit from average to “Wow.”

How exactly can you separate some of the facts from the fiction? Could your beliefs around credit lead you to put your credit score in jeopardy some day?

We’re going to take on three common credit score myths that could seriously hamper your ability to bring your credit score where you need it.

Myth #1: Good Credit Scores are for People With Money

It’s easy to look at people with expensive cars, big houses, and huge bank account balances and think: “That person must have an amazing credit score.”

But in reality, a high salary doesn’t necessarily translate to a higher credit score.

Here’s why:

Your credit score will look at a lot of things. It’ll cover details like your payment history and it’ll track how much of your credit you use. But there’s no weighting factor that looks at your bank account balance and automatically starts adding points. 

Lenders are fundamentally concerned about whether or not you can pay them back. They want to see that you use your credit responsibly and that you’re doing a good job of managing your debts over time. 

And here’s the best part:

You can have a great credit score on a limited income.

If someone with a lot of money has a bad habit of skipping payments and racking up debts, their higher tax bracket won’t prevent them from having a subpar score. 

It’s not about how much money you have. It’s how you manage the credit you do have.

Myth #2: Being Debt-Free is the Secret to an Amazing Credit Score

As a consumer and a person with financial goals that you’re working towards, there’s a lot to like about being debt-free.

You have more disposable income. You’re not having those stressful “Can I afford to have dinner before pay day?” thoughts when friends invite you to try out a new restaurant. And, from a quality of life standpoint, there’s something to be said for the peace of mind that comes with not owing anyone anything.

While debt can impact your credit utilization ratio if it’s credit-based, going debt-free in and of itself might not be a one-way ticket to an incredible credit score.

CNBC observed in 2020 that a credit utilization ratio that drops to zero because the debt is totally paid off can actually cause a credit score to dip because lenders may assume that the account is unused. 

But even so, while paying down outstanding balances may not necessarily take you all the way to an 850 FICO score, going debt-free is still an awesome financial goal.

Myth #3: Closing a Credit Card Can Improve Your Credit Score

When you’ve paid off a credit card or just noticed that you have a credit card that you don’t really use, it’s perfectly logical to want to go on a bit of a financial purge. After all, if the average credit card interest rate is 14.65%, shouldn’t spending less credit result in a better credit score?

Well, yes and no.

Although there is a lot to be said about the importance of using credit in a controlled way, closing a credit account can actually hurt your credit score in a surprisingly big way. Credit accounts, even if you’re not spending on them, can still contribute to your credit history, your credit mix, and your credit utilization ratio.

And while there are some precise circumstances where you can close an account with minimal effect on your score, you’re more likely to help or maintain your credit score by keeping it open. 


For many Americans, an attractive credit score is like a bowl of chocolates during the holiday season: everybody wants a piece.

But along with that common interest in having excellent credit, there are also a lot of myths surrounding credit scores that, if left alone, could potentially hurt your score.

We’ve just busted three credit score-related myths. What other money myths could be hampering your financial goals right now?