Let’s be honest — most of us learned about credit scores from a friend, a random Instagram reel, or that one uncle who “knows everything about finance.” And somewhere along the way, a lot of wrong information got passed around as fact.
The problem is, believing the wrong thing about your credit score can actually hurt you. You might avoid using a credit card you should be using, or panic over a loan rejection you didn’t need to worry about. So let’s clear the air today and bust the most common credit score myths that are probably messing with your financial decisions right now.
Myth 1: Checking Your Own Credit Score Lowers It
This is one misconception that seems to refuse to die down. The fact is when *you* inquire into your credit score, this is considered a soft inquiry, and there is nothing that will decrease your score. Only when a lender performs a credit report inquiry (hard inquiry) when applying for a loan will it have any effect on your credit score—and that too if there are several of such inquiries conducted in quick succession.
Myth 2: Your Annual Income Decides Your Credit Score
A lot of people assume a fat salary automatically means a great credit score. Nope. Your annual income and credit score are not directly connected. Your score comes from your credit report — things like payment history, credit utilisation, and credit account age. You could earn well and still have a low credit score if you’ve missed payments or maxed out your credit limit.
Myth 3: Closing a Credit Card Boosts Your Score
Feels logical, right? Less debt exposure should mean a better score. Except it usually backfires. Closing a card lowers your total available credit limit, which pushes up your credit utilisation ratio — and that drags your score down. Unless the card has heavy fees or a security risk, it’s usually smarter to keep it open and unused.
Myth 4: Paying Off All Debts Instantly Improves Your Score
Paying off debt is great for your finances, but don’t expect your score to jump overnight. Credit scores factor in payment history, credit mix, and account age too. Closing a loan account can even shrink your credit portfolio’s diversity for a bit. The improvement is real — it’s just gradual.
Myth 5: Joint Accounts Merge Your Credit Scores
Marriage or a joint bank account doesn’t fuse your credit history with your partner’s. Each of you has your own credit score, built from your own payment history. The only overlap happens with shared loans, where both people’s repayment behaviour gets reported.
Myth 6: You Have Just One Credit Score
Seen different numbers on different apps? That’s normal. India has multiple credit bureaus — CIBIL, Experian, Equifax, and CRIF High Mark — and lenders don’t report to all of them equally. Small variations between your CIBIL score and others are completely expected.
Myth 7: Co-signing a Loan Doesn’t Affect You
It absolutely does. When you co-sign, that loan shows up on your credit report too. If the primary borrower misses payments, your credit score takes the hit as well. Treat co-signing with the same seriousness as taking a loan yourself.
Myth 8: A Low Credit Score Always Means Loan Rejection
A low credit score makes loan approval harder, not impossible. Lenders also weigh your income, age, and job stability. Many lenders still offer a low credit score loan option, especially secured loans like a gold loan, where collateral reduces their risk.
Read: BUSTING THE BIGGEST MISCONCEPTIONS ABOUT CREDIT SCORE
How to Actually Keep Your Credit Score Healthy
- Pay every bill on time — payment history carries the most weight
- Keep your credit utilisation low, ideally under 30%
- Don’t close old credit cards unnecessarily
- Check your credit report regularly for errors
- Avoid applying for multiple loans in a short window
Final Word
Your credit score isn’t as mysterious as it seems once you separate the myths from the facts. A little awareness goes a long way — pay on time, keep your credit utilisation in check, and don’t fall for the misinformation floating around.
At FinancePuff, we believe informed decisions make for stronger finances. So the next time someone tells you a “credit score hack” that sounds too convenient, you’ll know better.
FAQs on Credit Score Myths
Does annual income affect credit score?
No, income isn’t part of the credit score calculation. It matters for loan eligibility, but not for the score itself.
Does closing a credit card affect credit score?
Yes, it can lower your score by reducing your available credit limit and raising your credit utilisation ratio.
Why do I have different credit scores?
Because different credit bureaus collect data separately, and not every lender reports to all of them.
Can you get a loan with a low credit score?
Yes. Options like a gold loan or a secured personal loan are often available even with a low credit score.
How much credit score is good?
Generally, anything above 750 in the CIBIL score range is considered good and improves your loan approval chances.