Incite Strategies

7 Myth about Credit Scores – Complete Guide

There are different myths about the credit score that are circulating on the internet, making the page confused about the increasing credit score on the internet. People with no information about the actual algorithm that lenders use for debt collection consider these myths true.

Understanding the algorithms and different types of algorithms can only help you understand the actual credit score. Sometimes, we pay for credit scores and get different types of credit scores that we don’t know about, and we trust the myths.

Hi, I am Invory Becker, founder of Incite Strategies. I helped 7,594 clients repair their credit reports to remove negative items from their reports legally. It’s time to clear up some misconceptions or myths about the credit score.

Let’s start the discussion!


1. Paying out for auto loans easily helps my credit score

One of the common myths about credit scores is that early payments on auto loans can help increase the credit score. People who have no understanding of the factors that affect the credit score will consider this true.

Early auto loan payments will have an impact on the two factors of the FICO score algorithm:

  • Payment history
  • Credit mix

Payment history

Payment history has a 35% effect on the FICO score. It helps the lender understand how serious you are about the payments on the debt. A long and good history of timely payments can help you increase your credit score.

On the other hand, the early payment of the loans will shorten the payment history and make it hard to judge the actual behaviour of the person about the payment. It becomes a thin credit report—a credit report with a shorter history.

The thin report can make other loan approvals difficult. Your history has the most closed accounts, and your credit report will drop because of this. Payment history is the biggest factor, and when it is short, it has a large effect on the score.

Credit mix

The credit mix records this type of information about loans and mortgages. It impacts 10% of the total credit score. Yes, if you think that it has a minimal effect on the credit report, the minimal effect can directly damage the credit score.

When you pay out your auto loan early, it will be removed from the credit mix and will affect your credit score in the future. The removal of this entry will affect the overall credit score. It will decrease your creditworthiness.

2. Checking credit reports decreases the credit score.

This is another common myth about the credit score. The checking of the score means you are monitoring your credit score. It is a soft pull or inquiry and doesn’t affect the credit score anymore.

3. Free credit reports are always true

One more thing I want to add here is that the credit score you get from the free credit report website is not always true. Experian and Equifax are the only two major bureaus that can check your Fico credit score. 

They provide the exact Fico credit score. Other websites, like CreditKarma, provide a vantage credit score. The vantage scores loan discounts paid for medical and other loans. It does not consider payment history while calculating the score.

Lenders or credit companies don’t use this because it gives a score after discounting many important things from the credit report. Even though you can download a free report from, it doesn’t provide you with a score.

There are nine different versions of the Fico score. We need to understand the version that a company is using to determine the FICO score. The FICO 2, fico 4 and fico 5

Credit report information security

These free sources provide you with a vantage point that will not help you with your credit card. On the other hand, they will record all the information about the credit report of the specific person. In this way, they sell this information to the new credit card companies.

The credit card companies started to advertise their products to such customers to sell their products. Because Credit Karma has a lot of information, the customer conversion rate from the information it provides is very high. 

4. Paying collection raises my credit score

It is again a myth about the credit score. Paying collections affects the credit score, depending on the type of debt. Some people think that clearing their debt will affect their credit report, but that is not always true.

Debt collection remains for up to 7 years in the credit report. After that, they can be removed from the report. But this is the least regulated section, and the credit company doesn’t take it seriously enough to remove the debt from the credit report.

Pay the debts

First of all, closed accounts have no effect on the credit score. If someone pays the entire loan, you can give a notice to the credit company in writing. The credit company will help you remove debt from your credit report.

In some cases, we suggest paying the remaining loan. It is better to hire a credit specialist to help you in such situations. By law, there are hundreds of pages that support the credit card holder. You can consult with a credit specialist to solve this problem for you.

Ask for validation

You can ask for the validations of the loans and other payments on the debt. Another way to remove the debt is through a validation request. You can request that the credit company validate the due debts and payments.

It always needs to be kept in mind that asking for the validation of medical loans is not validation. If you have a medical loan and you want to validate it, you can ask the company to help you. Due to weak regulation, you have to take this step legally.

The credit specialist will help you avoid harassing calls and notices from creditors or lenders. You can legally ask for the validation of the loans that you have already paid off to remove them, and your credit score will not be affected. 

5. Giving access to the card

Sometimes people gave access to the company with their cards. They do this to save time, and credit card companies can easily deduct their loan payment from the cards. However, it gives credit card companies the right to deduct the remaining money at any time. 

6. You are using your credit card monthly

Move on to the next and most common myth about using credit cards daily to increase your credit score. It is not true because credit card companies love when people use their cards because they can charge interest on the payment.

If it is a secured credit card, you don’t need to be tense about it because it will not be active if you don’t use it. So you use it less than 30 percent of the recommended limit of 25% to avoid high utilization.

If it is not a secured credit card, you have to use it once every three to six months. Most credit card companies have different times to check the activity of their cards. So, you don’t need to use it to buy something, but to make it active with time.

Sometimes you see a change in the credit score. It depends on the time when credit card companies report your credit activity to the Bureau. For instance, if your credit date is the 5th and the company reports on every first day of the month, the payment is recorded in that report.

The date of the report will be mentioned on your credit portal, and it changes with time. Some people pay their payments because of the reporting, and this trick helps them save their credit score.

7. Inquiries affect the credit score

It is also a myth that credit inquiries affect the credit score. First of all, soft inquiries don’t become part of the annual credit report. If it is a hard inquiry, then it will be recorded in your credit report.

This is good news for credit card holders, whose inquiries only impact 10 percent of the algorithm. It means that if you have four inquiries from each bureau per year, it will not negatively impact your credit score.

The inquiries stay for up to 2 years in your credit report and are removed with time. It is something that can damage your credit score for a short period of time. It can drop the credit score by up to 5 points.

Shopping around

When you are shopping for a car loan, you see several inquiries in your credit report. It is considered only one inquiry about shopping around and hits only one credit score. The reason for numerous inquiries is that car companies want their finance companies to inquire about your credit report, which increases the number.

Even if you visit different dealerships for auto loans in the time frame of 30 days, it will be considered a single inquiry in your credit score. You won’t need to worry about 1 to 5 points on your credit score and choose the best loan terms.

New credit card

Card cards are recorded separately in the credit reports. If you apply for two credit cards in the same month, there will be two different inquiries in your credit report. Here, you need to provide a letter of explanation about the need for a new credit card.

You have to explain your income-to-debt ratio. The credit company will decide whether it can help you start your credit journey or not. So evaluate your income-to-debt ratio before writing any credit report.

There are the main myths about a credit card that every creditor needs to understand before applying for one. It will help them maintain a good credit score and credit history. In some cases, we need a credit specialist to solve it legally.

Incitestrategies is one of the oldest and most trusted credit repair services in the United States. We have helped thousands of people deal with their credit reports, build their credit, and boost their credit. If you have questions about your own credit report, feel free to book a free consultation.

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