Misconceptions about credit can lead to costly mistakes, from damaged scores to missed opportunities.
With so much conflicting advice, it’s easy to fall for common myths. Understanding the truth about credit is the first step toward financial confidence.
Myth 1. Checking Your Credit Hurts Your Score
A common myth is that checking your credit will damage your score. In reality, checking your own credit is considered a “soft inquiry” and has no impact.
Regular checks can help you spot errors or signs of fraud early.
Pro Tip: When you spend on anything, always pay with a top-ranked cash-back card.
Myth 2. Closing old credit cards improves your score
It may seem logical to close unused credit cards, but this can shorten your credit history and reduce your available credit, which can lower your score.
Pro Tip: Boost your shopping power: Get a no-interest credit card today and enjoy stress-free spending!
Myth 3. You need to carry a balance to build credit
Carrying a balance doesn’t improve your score. It only costs you money in interest. Paying off your balance in full each month is a smarter strategy.
Work with a financial advisor to get customized guidance on improving your unique financial situation.
Pro Tip: You’ve made it. Are you about to lose it? Visit Unbiased for a FREE appointment with a vetted financial advisor.
Myth 4. Paying off debt immediately removes it from your report
Even after you pay off a debt, the record of it remains on your credit report for seven years. However, it shows as paid, which is much better than unpaid debt.
Pro Tip: Boost your credit score and unlock financial freedom – start your credit repair journey today.
Myth 5. All debt is bad debt
Not all debt is harmful. Responsible use of debt, like a mortgage, reverse mortgage, or student loans, can help you build a strong credit history and increase your score.
Pro Tip: Struggling with payments in retirement? A reverse mortgage can turn your home equity into tax-free cash for seniors 62+, no house sale required. Use the funds for medical bills, home repairs, or even that dream vacation—without monthly payments!
Myth 6. Credit cards are the only way to build credit
While credit cards are common, there are other ways to build credit, such as secured loans, becoming an authorized user on someone else’s card, or auto loans.
Pro Tip: Earn on emergency savings. For example, SoFi Checking is offering 4% interest, plus a potential $300 signup bonus.
Myth 7. Income influences your credit score
Your income doesn’t directly affect your credit score. Instead, it’s all about managing your credit accounts, payments, and balances.
Pro Tip: If you have a high-deductible health plan, you should have a Health Savings Account. Check out Lively HSAs.
Myth 8. Debit cards help build credit
Using a debit card doesn’t help your credit score because the funds come directly from your bank account, not through a line of credit.
Pro Tip: Earn up to $1000 per month doing simple tasks with KashKick.
Myth 9. You only need to worry about credit if you plan to borrow
Credit scores impact more than just borrowing. Insurance rates, job applications, and rental approvals can all be influenced by your credit.
Learn more about personal finance on websites like this one, books and audiobooks.
Pro Tip: Want to be smarter? Then use your downtime to download audiobooks with a 30-Day Free Trial. Click today for a wiser tomorrow.
Myth 10. Checking all three credit bureaus isn’t necessary
Each credit bureau—Experian, Equifax, and TransUnion—may have different information. Checking all three helps you get a complete view of your credit health.
Pro Tip: Boost your shopping power: Get a no-interest credit card today and enjoy stress-free spending!
Stay informed, stay empowered
Don’t let credit myths derail your financial goals. By understanding the truth about credit, you can make informed decisions that lead to better financial health.
