Things People Get Wrong About Credit Scores

Credit inquiries come in two forms: soft and hard. Soft inquiries — which include checking your own score, pre-approval screenings by lenders, and background checks by employers — are invisible to other lenders and carry zero scoring weight. Hard inquiries, by contrast, occur when you formally apply for credit and are visible on your report. Each hard inquiry can temporarily lower your score by a few points. Regularly monitoring your own report is encouraged by financial regulators and carries no downside.

Two significant scoring factors are directly affected when you close a card. First, credit utilization — the ratio of balances owed to total available credit — rises when a credit limit is removed, which signals higher risk. Second, length of credit history accounts for roughly 15% of a FICO score; removing a long-standing account can shorten your average account age. Keeping older accounts open and lightly used is generally better for your score than closing them, even if you rarely use them. See habits that quietly erode a good credit score for more on this pattern.

This myth likely originated from a misunderstanding of how card activity is reported. What matters for your score is that your card shows usage — a small purchase that you then pay in full demonstrates responsible behaviour without costing you interest. Lenders report your balance to bureaus regardless of whether you paid it off, so a zero balance after full payment still counts as account activity. There is no scoring benefit to carrying a revolving balance, and doing so only benefits the card issuer through interest revenue.

When you co-sign, you are not a backup — you are a co-borrower in the eyes of the lender and the credit bureaus. The account appears on your credit report, its balance factors into your utilization and debt load, and every payment — on time or late — is reflected in your score. If the primary borrower misses payments, your score takes the same hit as theirs. Before co-signing, it is worth understanding that you may be held fully responsible for the debt if the primary borrower cannot or does not pay.

Under the Fair Credit Reporting Act (FCRA), the standard reporting window for most adverse items is seven years from the date of first delinquency. Chapter 7 bankruptcies remain visible for ten years. While the scoring impact of older negative items diminishes over time — especially as positive history accumulates around them — the item itself doesn't disappear quickly. This is one reason that addressing credit problems promptly, rather than waiting them out, matters. If a negative item appears in error, you can formally dispute it; the CFPB provides a structured process for doing so. Understanding what triggered a score change can help you identify where delinquency-related drops originated.