Your credit score: myth vs reality  

Credit Score

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Team MONEYME|14 November 2024| 3-minute read

When it comes to credit scores, it can be difficult to distinguish myth from reality. Here, we break down seven common beliefs and sort fact from fiction.  

Myth 1: It costs to check your credit score  

Checking your score is free. You can do it anytime – and as many times as you like – without paying a cent.  

It only takes a couple of seconds to check your score via the MONEYME app. You can also use the app to get personalised insights and tips on how to improve your score, and track changes and improvements over time.  

Myth 2: Checking your credit score lowers it 

This isn’t the case. Instead, keeping an eye on your score can help you manage your money better, by motivating you to improve it – for example, by repaying debts on time. Keeping an eye on your score also means you might pick up on fraudulent activity if there’s an unexpected sudden change in your credit score. You don’t need to worry, you can check your score as many times as you like without doing any harm.  

That said, your score might be affected by lenders checking it often using what’s known as a “hard” check because it’s done with a view of giving you a loan or credit card. Too many hard checks could indicate you’re making many loan or credit card applications, which might suggest you’re struggling with cash flow – and cause your score to decrease. In contrast, when you check your score with a tool like MONEYME’s credit score check, it’s known as a “soft” check.  

At MONEYME, we don’t perform a hard check until you apply for a loan, so you can check your interest rate and repayments schedule first without having any effect on your credit score. 

Myth 3: Your income and demographics affect your credit score 

Your income has no impact on your score – and neither do demographics. Instead, your score is based entirely on your credit history, including whether you’ve repaid your debts on time and how many loan applications you’ve made. 

A person on a low income, who has always managed their money responsibly, could have a higher credit score than someone on a high income, who has repeatedly defaulted on their debts. 

Myth 4: No debt means a good credit score  

This one is complicated. Having no debt doesn’t decrease your score. However, to optimise your score, it’s a good idea to have positive credit-related activity in your history.  

It’s possible to achieve this without going into debt. For example, you could demonstrate you’re a reliable borrower by opening a credit card account, then repaying the entire bill every month.  

Myth 5: Repaying debts will remove them from your credit score   

Another myth. All debts, including repayments, usually remain on your score for two years.   

 But this isn’t necessarily a bad thing. Timely repayments tend to boost your score. It’s the overdue ones that lower it. A repayment late by more than 60 days and worth more than $150 usually affects your score for five years.  

Myth 6: When you get married your credit score merges with your partner’s  

Getting married has no impact whatsoever on your credit score. Your score and your partner’s score remain separate – influenced only by your conduct as individuals. 
 
However, it’s important to remember that your partner’s score could be relevant in some situations. For example, were you and your partner to apply for a loan together, your prospective lender would probably look at both your credit scores.  

Myth 7: Your credit score is the only thing that matters when you apply for a loan  

Definitely not. Your credit score is but one factor a lender considers when looking at your application.   

 Others include your income, expenses, savings, assets, employment status and other debts. If you’re considering taking out a loan, check out what lenders look at in more detail here. 

The truth matters 

Your credit score is important if you’re considering borrowing money – be it a personal loan or a mortgage. Knowing the difference between myth and reality can help you understand how your score works, so you can keep an eye on it and take steps to – with positive credit-related conduct – improve it. Check your score in a matter of seconds with MONEYME’s app. 

Check your score for free

Do you know your credit score? Download the MONEYME app to check your score for free today.