Credit Score Myths That Still Hurt Homebuyers in 2025

In today’s fast-paced digital mortgage landscape, credit scores remain one of the most misunderstood aspects of the homebuying process. Despite access to more information than ever before, many homebuyers in 2025 are still falling victim to outdated or incorrect beliefs about how credit scores work. These myths can lead to costly mistakes, delayed closings, or missed opportunities to secure better mortgage terms. Let’s break down the most common credit score myths that continue to trip up buyers in 2025—and what they need to know instead.

Myth #1: You Need a Perfect Credit Score to Get a Mortgage

The Truth:
While a higher score can unlock better interest rates, perfection isn’t required. In 2025, many lenders offer competitive mortgage products to borrowers with scores in the 620–680 range, especially for FHA loans and other government-backed options. The growing non-QM (non-qualified mortgage) market has also expanded financing access to those with credit challenges, gig economy income, or recent credit events.

Takeaway:
Focus on building a solid score—above 700 is great—but don’t delay buying a home if you’re in a reasonable range and financially ready.

Myth #2: Checking Your Own Credit Score Will Hurt It

The Truth:
Soft inquiries—like checking your own score through apps or credit monitoring services—do not impact your credit score. Only hard inquiries, like those made by lenders during the preapproval process, have the potential to slightly lower your score temporarily.

Takeaway:
Monitoring your credit regularly is smart and safe. It helps you catch errors and track improvements without penalty.

Myth #3: Paying Off All Debt Will Automatically Boost Your Score

The Truth:
This myth persists in 2025, but paying off certain debts (especially older credit cards) can sometimes reduce your credit utilization or even shrink your credit mix and history—both of which can impact your score. Also, closing paid-off credit cards can hurt your score by lowering your overall available credit.

Takeaway:
Focus on lowering your credit utilization ratio (keep it under 30%) and making consistent, on-time payments. Don’t rush to close old accounts unless necessary.

Myth #4: Credit Repair Services Can Guarantee Score Boosts

The Truth:
While some legitimate credit counseling services exist, many "credit repair" companies make false promises or charge for things consumers can do on their own, such as disputing errors. In 2025, regulators are cracking down on bad actors in this space—but consumers still need to be cautious.

Takeaway:
Use free tools like AnnualCreditReport.com, work with certified housing counselors, and beware of services that promise fast fixes.

Myth #5: Income and Job History Are Part of Your Credit Score

The Truth:
Credit scores are calculated based on credit history—like payment behavior, debt levels, and credit age—not income or job stability. However, your income and employment do play a critical role in mortgage underwriting, just not in the credit score itself.

Takeaway:
Lenders will look at both your credit score and your debt-to-income (DTI) ratio. Managing both is essential to secure the best loan terms.

Myth #6: You Can’t Get a Mortgage If You’ve Had a Bankruptcy or Foreclosure

The Truth:
In 2025, more flexible mortgage products—especially in the non-QM and alternative lending space—help borrowers with a history of financial hardship. Many loan programs offer options after a two- to four-year waiting period, assuming other criteria are met.

Takeaway:
Past financial issues don't disqualify you forever. Focus on rebuilding your credit and savings, and explore all your loan options.

Myth #7: One Credit Score Is All Lenders Use

The Truth:
Lenders often use different credit scoring models (like FICO 2, 4, 5 or VantageScore) from multiple bureaus (Equifax, Experian, TransUnion). The “mortgage score” you see on apps may not match the version your lender uses.

Takeaway:
Expect slight variations in reported scores. Lenders often use the middle score of the three bureaus to evaluate your creditworthiness.

Final Thoughts: Be Credit-Smart, Not Credit-Scared

Navigating the homebuying process is already stressful without being misled by persistent credit myths. In 2025, understanding your credit—and how it’s evaluated—can give you a serious edge. As digital platforms and AI-driven underwriting tools become more prevalent, lenders are looking at a fuller financial picture than ever before.

The best approach? Stay informed, ask questions, and work with transparent professionals who guide you through the mortgage process with your best interest at heart.