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Credit score myths

Myths, urban legends, misinformation and other falsity and nonsense about credit scores. Evidence and debunking. A growing list.

August 7, 2013. Updated | By Greg Fisher

"Republicans, including the Senate majority[SIC] leader, Mitch McConnell... " - a false statement by the New York Times (regarding Senator McConnell's position in the Senate)

The assigned numbers of the items below are for reference, and do not necessarily represent the popularity or significance of any item on the list. The word myth refers to modern myths, and is used to define an untrue urban legend—that is, falsity of any sort—whether created by lies or by statements from ignorance or misunderstanding.

  1. Myth: Every inquiry on my credit report and made by a lender lowers my credit score.

    Truth: "For many people, one additional credit inquiry (voluntary and initiated by an application for credit) may not affect their FICO score at all." (2018) - Fair Isaac, the FICO score company

    False statements that spread the myth:

    "Most important to note, hard inquiries will lower your credit score by a few points and remain on your credit report for two years," and "While one hard inquiry will knock a few points off your credit score, multiple hard inquiries in a short amount of time can cause significant damage to your score." - Credit Karma

    6/27/15. What happened next: Kenneth Lin, Credit Karma capitulated.

    "Every time you apply for, use, make or miss a payment on a loan or credit card, you build another entry on your credit report - and raise or lower your credit score." - Freddie Mac and the Consumer Federation of America, repeated by the Department of Consumer Affairs, State of California

  2. Myth: Employers use credit scores. #Myth2

    Truth: Employers do not use credit scores. The key to extinguishing this urban legend lied in asking journalists the question that exposed their fatal flaw: Who is your source?


    "For how widespread this idea is, see this nice post at" - Columbia Journalism Review

    "Every few years I'm forced to spend some of my time re-convincing the world that employers do not use credit scores as part of their employment screening processes." - John Ulzheimer

    "The use of credit scores for employment screening purposes is a myth." -

    False statements that spread the myth

    "Unfortunately, just as average credit scores are slipping, more employers are using them to winnow out job applicants." - CNN (Time Warner)

    “It can also affect their ability to rent an apartment and get a job, as many employers now check credit scores as part of the hiring process.” - Huffington Post (AOL)

    "The score that lenders really use may factor into your chances of getting a car loan, a mortgage, or a job, and into what you'll pay in interest, as a deposit for rent and utilities, and, in many states, for insurance." - Consumer Reports magazine (Consumers Union)

    "You may even have an easier time getting a job as many employers these days are checking out credit scores because they want to hire responsible employees." - Jean Chatzky, on

  3. Myth: The percentage of people with credit scores under 600 increased from 15 to 25 percent.

    Truth: That segment of the distribution in the FICO 8 model moved only 1.4%.


    None (besides by


    "Figures provided by FICO show that 25.5% of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders... Historically, just 15% of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on" - Associated Press

    False statements that spread the myth

    "Data released by FICO Inc. indicates that more than a quarter of Americans -- some 43 million people -- now have credit scores of 599 or lower, a threshold that will make it tough to get credit cards, mortgages and other loans. Bad credit scores can even make it difficult to find a job... Historically, 15 percent of Americans have had credit scores below 599." (even includes the employers myth) - ABC News (Disney)

    "The credit scores of millions more Americans are sinking to new lows." - the original AP article as republished through syndication by the Christian Science Monitor

    "The credit scores of millions more Americans are sinking to new lows." - the original AP article as republished through syndication by USA Today

    "But the proportion of people with poor ratings — credit scores under 600 — has grown from about 15 percent in the years before the recession to about 25 percent in 2011." - editorial, New York Times

  4. Myth: 30 percent is a magic number regarding an account's balance to-limit ratio.

    Truth: "The more you owe compared to your credit limit, the lower your score will be." - Fair Isaac


    The So-Called "Credit Utilization Ratio," and Advice About It - Keep it to (fill in your own number here)% -

    Statements that spread the myth

    "Play it safe and only charge 30 percent or less of your available credit." - National Foundation for Credit Counseling

    "[SIC]Uncle Sam you can't routinely raise your limit, so keep the ratio below 30%." - Wall Street Journal gibberish and nonsense

    "Ideally, you're keeping that number under about 30 percent." - Some guy on (links to Quizzle)

    "Most experts recommend keeping your utilization below 30 percent." - Matt Shulz, Investing Answers, on Huffington Post

    (InvestingAnswers, Inc. fails the litmus test by falsely stating: " Want a new job? Your employer is going to check your credit score, so it better be high." (see Myth #2, above))

    (And, who are these "experts," anyway?)

    "Keep credit card balances low relative to credit limits (30 percent or lower is recommended)." - Federal Reserve Bank of Philadelphia

    (Also, see the Federal Reserve Bank of Cleveland repeating the employers myth (at 9:23 in the video).)

    Given that lower is always better, here is a confounding statement by Fair Isaac in 2013: "I think 20 percent, for a lot of people, is more realistic. I would rather talk about that as a realistic goal that they can attain, rather than something that might feel like a stretch and out of reach."

    Utilization ratio myths

  5. Myth: Credit scores have 5 factors.

    Truth: There are dozens of factors. For instance, the Equifax Beacon FICO score has "reason codes" that number 1 through 6 and beyond. Also, this list from Fair Isaac, the FICO score company, lists many more than 5 factors.

    Statements that spread the myth

    This text is on a website of the National Association of Realtors who claims that it is provided by "the credit scoring experts at Fair Isaac Corporation": "The five factors that determine your FICO® score are... "

    The same statement and attribution are repeated on Union Privilege was established by the AFL-CIO.

    "If you're wondering how to improve your credit this fall, one way is to master the 5 factors that 'feed' your FICO score." - Jeanne Kelly, The Credit Owl, on Huffington Post

  6. Myth: The FICO credit score scale has 850 points.

    Truth: The range of some scores is 550, not 850. Their scale is 300-850. Fair Isaac states, "FICO scores range from 300-850." Similar to Myth 17.

    Statements that spread the myth

    CNN states, "For example, while a FICO score of 790 out of 850 is considered excellent... "

    For more CNN high jinks, see "Labor Day, 2013 - CNN and the myth about employers and credit scores" and "False information spread by Time Warner/CNN."

    Here's a sentence (with bonuses) from a domain: "Pavelka, 56, has a credit score of 848 out of 850 and a letter he received from the credit bureau recently announced his rating 'ranks higher than 100 per cent of U.S. consumers.'"

    A couple o' things on that one, Skippy:

    • It isn't out of 850, it is out of 550.
    • It is unlikely that that letter was from a credit bureau.
    • Only a bank (OK, almost only) could come up with such a mathematically impossible statement ("ranks higher than" 100% (Huh?)).
    • The news organization you're riffing on has has some serious problems.

    "Frontline" (a television program on PBS): "The best credit rates are given to people with scores above 770, but a score of 700 -- out of a possible 850 -- is considered good, according to Fair Isaac."

    Indeed, that false statement by Frontline enjoys important status: External Links on Wikipedia's article "Credit score (United States)."

  7. Myth: So-called "credit utilization ratio" makes up 30 percent of a FICO credit score.

    Truth: The myth is mathematically impossible. Fair Isaac states that the "Amounts owed" category of credit report information determines 30 percent of a FICO score, and that credit utilization is only one of the factors evaluated in that category.

      • Credit score utilization ratio misinformation
      • Utilization Ratio
      • Canada Day
      • Tips for reporters
      • #Myth7

    Unfortunate statements

    Until earlier this year, a page on falsely stated, "30%: Credit utilization—The ratio of current revolving debt (such as credit card balances) to the total available revolving credit or credit limit. FICO scores can be improved by paying off debt and lowering the credit utilization ratio.[9]"

    It even made reference ("[9]") to a newspaper article published by a national media organization. But, that organization is not infallible. If you confront its plain falsity, however, it instructs you to "read the story again."

    Today (under the peculiar term "Debt Burden"), the Wikipedia page says, "This category considers a number of debt specific measurements, and not just the infamous credit card debt to limit ratio, as is commonly misreported."

    But, even after the long-held false belief—despite the virtual community's eventual realization of the truth—the same, wonderful world-wide web wiki links to a website that states

    Thirty percent, also about one-third, of your Fair Isaac rating depends on your utilization of existing credit accounts. If you have $10,000 of available credit card limits and owe $5,000 or more on your accounts, then your credit utilization is high and decreases your score. Keep all balances to 50 percent or less of your available credit limits; about one-third utilization is even better.

    [Also, see Myth 4, above.]

    That same website states, "This means that your utilization ratio is higher then what potential lenders like to see, not to mention that it accounts for 30 percent of your credit score."


    "That's because Fair Isaac assigns a heavy weight -- 30 percent of a person's score -- to what is known as "utilization" of available credit. Utilization basically boils down to this: If you've got a card with a $5,000 credit limit and you're carrying a $4,750 balance, you've got a 95 percent utilization rate." - Washington Post

    "Credit utilization: 30 percent of the total credit score is based on a borrower's credit utilization -- that is, the percentage of available credit that has been borrowed." -

    "Such small payments help your credit score because they lower your debt utilization ratio, which accounts for 30 percent of your credit score, according to [Fair Isaac spokesman Anthony] Sprauve." - U.S. News & World Report

    "Sixty-five percent of your score depends on just two things — your payment history and the amount you borrow compared with the total credit available to you (what's known as a credit utilization ratio)." - Chicago Tribune

    "In fact, credit utilization, your total debt compared to total credit, comprises 30 percent of your credit score." -

    "Amounts owed -- This is also known as your 'debt utilization ratio.' This amount, which is the second largest factor in your score, reflects how much of your credit limit(s) you're currently using up... This factor accounts for 30 percent of your score." - Huffington Post

    "Your credit utilization - which is the amount of your credit card balance compared to the credit limit - affects 30% of your credit score." -

    "A big chunk of your FICO credit score – 30%, to be exact – is based on the amount of credit card debt you're carrying vs. your overall credit card limits. This ratio is known as your 'credit utilization rate.'" - (AOL)

  8. Myth: When you close an account, its history is removed from your credit report.

    Truth: If it were that easy, you could just close all the bad ones. An account's history remains after the account is closed.

    Also, see
      • Myth within myths lists
      • Equifax engages public in social media
      • Post post a Huffington Post post
      • Information on Illinois website supported by taxpayers
      • No such thing as credit karma


    "A credit report serves as a record of your account history, so closing an account does not automatically remove it from the report." - Experian

    "Closing an account doesn't make it go away... A closed account will still show up on your credit report, and its history will be considered by your FICO Score." - Fair Isaac on

    "I'm going to start by providing a couple of misconceptions that I hear regularly with regard to closing accounts. No. 1, that the FICO score penalizes you for having too much available credit, and No. 2, that if you close an account, you lose all the history associated with that account." - Bankrate

    "So even if an account was closed five years ago, for example, its continued appearance on a credit report would help extend a borrower's length of credit." -, Bankrate, Inc.

    "In fact, one of the biggest myths about credit scoring is that closing an account will stunt the aging process." - New York Times

    "The myth you’ve identified is that when you close an account you lose the benefit of the age of that account... I posed this question to Craig Watts from FICO and he confirmed what I already knew from my time at FICO." - John Ulzheimer, credit report expert

    Credit scares - Unfortunate statements

    "This credit myth advocates closing old and inactive accounts to hike up your score. However, this might inadvertently have the opposite affect[SIC] and lower your credit score because now the credit history appears shorter." - "Credit Myths and Misconceptions," TransUnion

    "By closing your oldest accounts, you are shortening your overall account length, which will only hurt your credit score." -

    "And canceling a card you've had for a long time will also diminish the length of time you've had credit, another data point that figures in your score." - WisePiggy, QuinStreet, Inc.

    "You should keep your oldest credit card open, even if the rate is your highest interest rate. Part of you credit score is determined by the length of your credit history, and if you close your oldest credit card you will shorten the length of your credit history, which will lower your credit score." -

    "Oftentimes people will close a credit account after it is paid off, which actually reduces a credit score by shortening credit history, especially if it is your oldest account." - on, a campaign by the Consumer Federation of America

    "Don't... [c]lose the oldest account on your credit reports. This could cause your credit history to appear shorter and could harm your credit score." - Credit Karma

    "Canceling old credit accounts can lower a credit score by making the credit history appear shorter." - Credit Karma (on a page about modern myths)

    "While canceling a long-held but seldom-used account may seem responsible, it will shorten the length of your credit history, which can lower your score." - Credit Karma, as published in "Reader's Digest"

  9. Myth: FICO credit scores have existed since the 1950s.

    Truth: The first FICO score was introduced in 1989.

  10. Myth: The national average credit score

    Truth: With multiple credit bureaus and credit score models, everybody has their own idea.

  11. Myth: Lenders lie to credit bureaus.

    Truth: If they did, we'd be screwed.

  12. Myth: An 850 credit score in mortgage lending

    Truth: The highest credit score in mortgage lending is not 850, so striving for that number is a fool's errand.

  13. Myth: Payments less than 30 days late affect credit scores.

    Truth: Impossible; the credit report system doesn't even record anything less than 30 days late.

  14. Myth: You have to have a credit score to get a mortgage loan.

    Truth: Even the popular FHA program does not require credit scores.

  15. Myth: Utilization ratio history

    Truth: The ratios are calculated only on current balances.

  16. Myth: The so-called utilization ratio is a major credit score factor.

    Truth: Fair Isaac has not revealed that part of its secret.

  17. Myth: A credit score on a scale of 300 to 850 is zero.

    Truth: Zero is impossible because it is outside the scale (similar to Myth 6).

  18. Myth: Employment is a credit score factor.

    Truth: FICO credit scores do not consider employment information.

  19. Myth: Collectors can delete legitimate collection accounts from credit reports in return for payment (aka "pay for delete").

    Truth: If they're doing that, their identities are secret.

  20. Myth: A credit score is a three-digit number.

    Truth: Not necessarily. It could be one digit, two, four or any number of digits. It could even be a letter.

  21. Myth: Social media information in credit scores

    Truth: If it were in them, they wouldn't be credit scores, anymore. #SocialScenceFiction

  22. Myth: Credit scores are calculated with data from multiple credit bureaus.

    Truth: If you repeated the myth and have evidence that it is actually true, then email it, Chump.

  23. Myth: There is "no quick way to fix a credit score." (Fair Isaac)

    Truth: There is, indeed, a way to quickly increase a credit score: Decrease an account balance to lower its balance to-limit ratio (the so-called "credit utilization"). It is fast; overnight. In a mortgage loan application? Raise your score with 'rapid rescore.' 2016-01-13

  24. Myth: A FICO credit score scale is 350-800. (Fannie Mae)

    Truth: It's complicated, convoluted and bizarre. 2016-10-01

  25. Myth: A FICO credit score scale is 350-850. (Fannie Mae)

    Truth: [See above] 2016-10-01

  26. Myth: Credit scores reduce a person's entire financial history down to a single number. (Duke University #1411o | n1924 | #dotEdu | #MrBrodhead)

    Truth: How could they? There is no deposit account information in credit reports, for instance. 2016-10-04

Also see


Myths directory

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