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When it comes to buying a home, your credit score plays a starring role. It influences whether you qualify for a mortgage, the types of loans you’re eligible for, and the interest rate you’ll pay. But there’s a lot of misinformation out there about what helps—or hurts—your score. Believing the wrong things can make it harder to reach your homeownership goals.
To help you stay on track, let’s debunk some of the most common credit score myths that could stand in the way of your mortgage plans.
Myth #1: Checking Your Credit Hurts Your Score
Many people shy away from looking at their credit report, fearing it will cause their score to drop. The truth? Checking your own credit is completely safe. These types of checks are considered soft inquiries and have no effect on your score.
It’s only hard inquiries—when a lender pulls your credit for an application—that can temporarily lower your score by a few points. Even then, the impact is minor, and inquiries are only a small part of your overall credit profile.
✅ Tip: Review your credit report regularly to spot errors, track progress, and catch identity theft early. You’re entitled to a free report each year from the three major bureaus (Experian, Equifax, and TransUnion) at AnnualCreditReport.com.
Myth #2: Closing Old Credit Cards Always Helps
It might seem smart to close a credit card you no longer use, but doing so can backfire. That’s because the length of your credit history—how long you’ve had accounts open—is a key factor in your score. When you close an older account, you shorten your average credit age, which could lower your score.
Another factor is credit utilization, or how much of your available credit you’re using. Closing a card reduces your total available credit, which can make your utilization ratio look higher even if your balances haven’t changed.
✅ Tip: If an old card doesn’t carry annual fees, consider keeping it open and using it occasionally for small purchases. This keeps your credit history intact and your utilization ratio lower.
Myth #3: Carrying a Balance Boosts Your Score
Some people think leaving a balance on their credit cards shows lenders they can handle debt. In reality, carrying a balance only costs you money in interest charges. What truly matters for your score is your payment history and how much of your available credit you use.
✅ Tip: Aim to pay off your balances in full each month if possible. If you can’t, try to keep your credit utilization below 30% of your available credit—and lower is better. For example, if you have a $10,000 credit limit, keep balances under $3,000.
Myth #4: Your Income Directly Affects Your Score
It’s logical to think that earning more money means a better credit score, but income isn’t part of the scoring formula. Instead, your credit score reflects how you manage the credit you have.
That said, lenders still care about your income because it factors into your debt-to-income ratio (DTI)—a measure of how much of your monthly income goes toward debt payments. Even with a high credit score, a high DTI could make it harder to qualify for the mortgage amount you want.
✅ Tip: Focus on reducing debt and making payments on time. That way, you’ll keep both your credit score and your DTI in good shape when you apply for a mortgage.
Myth #5: All Debts Count the Same
Not all debt affects your credit the same way. Revolving credit (like credit cards) typically has a bigger impact on your score than installment loans (like student loans, auto loans, or mortgages). That’s because revolving credit has no fixed repayment term and shows how you manage ongoing access to credit.
High credit card balances, in particular, can drag down your score quickly, while installment loans often have a more neutral effect as long as you make payments on time.
✅ Tip: If you’re looking to improve your score before applying for a mortgage, prioritize paying down revolving credit card balances first.
Why This Matters for Your Mortgage Plans
Your credit score isn’t the only factor lenders look at, but it’s one of the most important. A higher score could help you:
- Qualify for more loan options.
- Secure a lower interest rate, which can save thousands over the life of your loan.
- Enjoy a smoother, faster approval process.
Believing myths about your credit could hold you back, but understanding the truth helps you make smarter financial decisions.
Buying a home is one of the biggest financial steps you’ll ever take, and your credit score is a crucial part of the process. Don’t let myths or misinformation stand in your way. By checking your credit regularly, keeping accounts open, paying down balances, and understanding how debt really works, you’ll be better prepared for mortgage success.
Next Step: Ready to explore how your credit score affects your home loan options? The team at Mortgage Investors Group is here to guide you every step of the way.
