8 Things Everyone Gets Wrong About Credit

Credit is a big deal these days. It’s an important part of our economy, and it can determine how easily we can get what we want. We all make mistakes when it comes to credit, but here are some of the most common ones.

If you want to know more about some of the common misconceptions surrounding credit, be sure to read until the end.

The Purpose of Credit

Credit is a financial tool that can be used to help people buy things they need or want. When you have credit, you are borrowing money from a lender. You will usually have to pay back the money you borrow with interest over time.

When you use your credit card, for example, your bank loans you a set amount of money and charges you interest on that loan. The interest rates can vary quite a bit depending on the type of credit card and how risky the loan is.

Some people think that having too much debt is bad because it means they will have to pay back more money than they originally borrowed. This is not always true.

In fact, having some level of debt can be beneficial because it shows that you are able to manage your finances well. It also gives you some protection if something happens and you cannot afford to pay your bills.

Income Affects Credit Score

Credit scores are a measure of a person’s creditworthiness. They are used by lenders to make decisions about whether to approve an application for credit and how much interest they will charge.

Your credit score is based on your credit history, which includes the amounts you’ve borrowed, the terms of those loans, and the payments you’ve made on time. Credit utilization—the percentage of your available credit that you are using—also affects your score. Your credit score has nothing to do with how much money you are paid.

Credit Soft Pull

A credit soft pull can be the first step in getting your score higher. Credit utilization, or how much of your available credit you’re using, is one factor that lenders use to decide if you’re a good candidate for a loan. Lenders may also consider your recent credit activity when making a decision.

When you get a letter from your lender notifying you of an upcoming credit soft pull, it’s important to understand what this means and take the necessary steps to improve your credit score. Don’t panic – there’s no need to rush into making any changes.

If you’ve been proactive about improving your credit score and haven’t had any recent negative activity, then your score will likely remain unchanged by the soft pull.

However, if you have had some negative activity or if your score is low due to poor credit history, then the impact of the soft pull could be significant.

There is a difference between a soft pull which is you check your score and a regular pull where a lender checks your score.

Good Credit Makes You Rich

Nope, having good credit doesn’t mean you’re automatically wealthier. In fact, if you have poor or no credit, you might not be able to get a loan at all – which can seriously impact your ability to purchase items like a home or car.

Plus, having good credit might not even necessarily mean that you’ll be able to afford the highest-priced items. For example, if you have excellent credit but want to buy a car with a high-interest rate, there’s a good chance you won’t be able to afford it.

A Perfect Credit Score Doesn’t Give You More Benefits

No matter how perfect your credit score may be, you may not be getting all the benefits that come with it. Credit reports provide an overview of your credit history and can help you attain loans, leases, and other forms of financing.

In reality, a perfect score may garner the same benefits as a person with 10 to 15 points less as scores are categorized from poor to good to very good.

Clearing Credit Card Debt Doesn’t Improve Your Score

This one is probably the most common misconception. Many people believe that if they clear their debt, their score will go up automatically. This isn’t always the case, and in fact, often times having too much debt can actually have a negative effect on your score.

Clearance rates for delinquent credit card debts hover around 18%, meaning that almost one in five consumers who try to get their credit report updated end up losing because of it.

In addition, if you have more than $10,000 in total outstanding debt on all of your accounts combined (credit cards, student loans, etc.), your credit score will take a hit regardless of whether or not you’ve cleared all of your card balances. That’s because any balances above 30% of your total available borrowing capacity will ding your score.

While it’s true that having less debt can help improve your credit rating over time, there are other factors that contribute as well (such as payment history). So don’t focus solely on clearing off your card debts – make sure you’re also taking care of other financial obligations as well to improve overall creditworthiness.

Anyone Can Access Your Credit Score

Credit scores are a measure of your creditworthiness. Not anyone can access your score, the system has been designed to protect at some level, and it requires special verification to check a person’s credit score.

That keeps anyone from randomly pulling your credit score and affecting you in a big way. As mentioned earlier pulling the score can cause a reduction in points.

Getting Married Affects Your Credit

Your credit score is subject to each person, so whether you are married or single has no impact on your credit score. Your score is dependent on your spending, so keep that in mind.

Getting married means that both parties can have a credit score, so the person with the better one can do things the other party may be unable to do. At times both parties may use their respective scores to do a purchase together as husband and wife.


Credit is a huge financial decision and it can be difficult to know what you’re getting yourself into when it comes to credit.

In this article, we have outlined eight common mistakes that people make when considering credit, and we hope that by reading this you will be able to avoid common misconceptions.