When you’re preparing to buy a home or take out a loan for another big purchase, your credit score suddenly becomes a lot more important. Most people don’t think much about it until that moment. But if you’re now looking for ways to improve your credit score before you apply, you’re already ahead of the curve.
The problem is that a lot of the advice out there is wrong. Friends, social media, and even some financial websites repeat myths that can work against you. In some cases, following the wrong advice can cost you thousands of dollars in higher interest rates.
Here’s what actually helps: understanding how credit really works. Once you do, a lot of this becomes much clearer. Here are some of the most common myths and the truth behind them.
How to improve your credit score
If you want to improve your credit score, the most important steps are usually straightforward. Start by paying every bill on time, since payment history is the single largest factor in your score. After that, focus on keeping your credit card balances low. A good rule of thumb is to use less than 30% of your available credit, and lower is better.
Check your credit report at least once a year (you can get one free at annualcreditreport.com). Errors, outdated information, and signs of fraud all show up there, and any of them can drag your score down without you knowing. It’s also worth limiting unnecessary credit applications and keeping older accounts open, since both affect your credit history.
Why credit score myths can cost you thousands
Most credit myths don’t sound like myths. They sound like reasonable advice. Close old accounts. Carry a small balance to show activity. Don’t check your credit too often. The problem is that all three of those are wrong, and following them can quietly lower your score.
When your score is lower than it should be, lenders charge more. Even a small difference in your interest rate can add up to thousands of dollars over the life of a mortgage or car loan.
Understanding how credit actually works is one of the most practical steps you can take before applying for a loan. Here are some of the most common credit score myths and the truth behind them.
Myth #1: Checking your credit score hurts your score
Many people avoid checking their credit because they think it will lower their score. It won’t.
When you review your own credit report or credit score, it’s called a soft inquiry. Soft inquiries have no impact on your score, and they also occur when companies review your credit for pre-approved offers.
What can affect your score are hard inquiries. Those happen when you apply for new credit, like a mortgage, auto loan, or credit card. Even then, the impact is usually small and temporary.
Checking your report regularly is one of the better habits you can build. You may find errors or signs of fraud that are dragging your score down without you knowing it.
Myth #2: Carrying a balance helps your credit score
Some people intentionally avoid paying off their credit card balances in full each month. The thinking is that lenders want to see you carrying debt. That’s not how it works.
You don’t need to carry a balance to build a strong score. Credit scoring models look at how you manage credit, not whether you’re paying interest. As long as you’re using your card and paying on time, you can build a strong credit history without carrying a dollar of debt.
Carrying a balance doesn’t help your score. It just costs you money in interest. Pay your cards in full whenever you can and keep your balances low in the meantime.
Myth #3: Closing old credit cards will improve your credit score
Closing old credit cards seems like it would help. You’d have fewer accounts and a cleaner credit file. The problem is that it can work against you.
Older accounts help show a longer credit history, which factors into your score. When you close a long-standing account, the average age of your accounts can drop. Closing a card also reduces your total available credit, which can push your utilization ratio higher even if your balances haven’t changed.
Keep older accounts open, even ones you rarely use. An occasional small purchase is enough to keep the account active. That’s a lot easier than rebuilding the history you’d lose by closing it.
Myth #4: Paying off debt instantly improves your credit score
A lot of people pay down a balance and then check their score the next day, expecting to see a change. It doesn’t usually work that way.
Credit scores are based on information lenders report to the credit bureaus, and those updates typically happen once a month. So even after you pay down debt, it may take a few weeks for the change to show up on your credit report. And when it does, your score may climb gradually rather than all at once.
That doesn’t mean it isn’t worth doing. Paying down balances is still one of the best moves you can make. It just takes a little patience.
Myth #5: You only have one credit score
Most people assume every lender sees the same number. They don’t.
You likely have several credit scores, and they can vary depending on which bureau the lender pulls from and which scoring model they use. Mortgage lenders, auto lenders, and credit card companies don’t all use the same formula.
That’s why the score on your credit monitoring app may not match what a lender sees. The numbers are usually in the same range, but they won’t always be identical. What matters most is that good habits will generally move all of your scores in the same direction.
Myth #6: All debt hurts your credit score
Avoiding debt altogether might seem like the safest move for your credit. It isn’t.
Credit scoring models are designed to evaluate how well you manage borrowed money. When you make payments on time and keep balances under control, that works in your favor. Having a mix of credit types, like a credit card, car loan, or mortgage, can also strengthen your profile. Lenders want to see that you can manage multiple types of credit responsibly.
The goal isn’t to avoid credit. It’s to use it carefully.
Myth #7: It takes years to improve your credit score
Recovery takes time, but not always as long as people think.
Some changes can show up faster than you’d expect. Paying down a high credit card balance can lower your credit utilization, and that update may appear on your report within a month or two once your lender reports it. Correcting an error on your credit report can have a similar effect once the bureau processes the change.
You won’t fix years of credit problems overnight. But you may start seeing movement within a few months, not a few years.
Myth #8: Married couples have a joint credit score
Marriage doesn’t merge your credit. Each person keeps their own credit report and credit score, and lenders evaluate them separately. One spouse can have a strong score while the other has a weaker one.
That said, your finances can still affect each other. If you open a joint account, both of you are responsible for the payments. A missed payment on a shared account can show up on both credit reports and pull both scores down.
If you’re planning a major purchase together, like a home, it’s worth having both partners review their credit well in advance. Finding a problem early gives you time to fix it before it affects your loan options.
Simple habits that can help improve your credit score
Knowing what not to do is half the battle. These habits cover the other half.
Pay every bill on time
Payment history is the single most important factor in your credit score. Even one missed payment can leave a mark. Automatic payments or calendar reminders make it easier to stay consistent.
Keep credit card balances low
Credit scoring models look at how much of your available credit you’re using. The lower your balances relative to your limits, the better.
Check your credit report at least once a year
Errors and outdated information can drag your score down without you knowing. Catching and correcting a mistake is one of the fastest ways to improve your credit score.
Be selective about new credit applications
Every time you apply for new credit, a hard inquiry may appear on your report. One or two won’t do much damage, but several in a short period can raise a red flag with lenders.
Final thoughts on improving your credit score
Improving your credit score takes time, but you don’t need a perfect financial history to make real progress. Consistent habits, a few corrections where needed, and a clear understanding of how credit really works can move the needle more than you might expect.
If you’re preparing for a major purchase, like buying a home or applying for a loan, it helps to know where you stand before you apply. The team at Allegiant Wealth Strategies regularly works with individuals and families across Battle Creek, Kalamazoo, and surrounding Michigan communities to review their credit and prepare for important financial decisions. Review will be for educational purposes only. Specialized credit services not offered through Allegiant Wealth Strategies or Cetera Wealth Services, LLC.
If you’d like a second set of eyes on your situation, schedule a complimentary, no-obligation consultation. We’ll walk through your credit report and credit score together and help you figure out the next right step. You can contact us hereor call (269) 218-2100.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to ensure our information is accurate and useful, we recommend that you consult a tax preparer, professional tax advisor, or lawyer.