I honestly haven't observed this. DH and I got our first mortgage ~4 years ago - the home we owned prior, we bought outright. Our only debt between us at that point (when we applied for the mortgage) was my student loan. No credit card debt, no car loans, so we had very little debt. DH had no student loans, no nothing, and yet his credit score was higher than mine at that time.
I like not owing people too.
And we don't - our only debt is now our "30-year" mortgage, which we have ~19 years remaining on after just over four years in this home. Our FICO scores are pretty decent despite not having lots of debt.
A good FICO score also helps with your insurance rates, with background checks with employers (some do pull your credit now, especially depending on the field), and in the long run, if you need a loan, it can save you lots.
As for your loan, I would guess you did pay 12% interest, you just paid it for three years instead of five or whatever was originally planned. I believe the amount you mentioned was an annual percentage rate, meaning you pay 12% of whatever you owe per year. Of course, it's more complicated than that, but I don't think you lower your interest RATE by paying it off faster, I think you just lower how long you paid it or how much you paid in interest.
You absolutely do not have to pay interest to play the FICO "game". Only once in the last 10 years have I paid interest on a credit card - we had solar panels installed on our home, and were called out of the blue to purchase them as they were backordered forever. We didn't have $12K sitting around in checking at that moment, and had to charge it and, sadly, carry part of it for one month until we freed up the money to pay them off completely. It still ticks me off that we spent ~$200 in interest, but in the long run it was better than possibly waiting months and months for the panels.
