Credit Myths, Debunked
Some credit advice gets repeated so often that people stop questioning it, even when it's wrong. A few of these myths are so common that we hear a version of them in almost every consultation. Let's clear them up.
Myth: Closing an old card helps your score
This is one of the most common instincts, especially with a card you no longer use. In reality, closing an account can shorten your average credit history and reduce your total available credit, both of which can work against you. An old, unused card sitting quietly in your wallet is often doing more good open than closed.
Myth: Checking your own credit hurts your score
Checking your own report or score is what's known as a soft inquiry, and it has no effect on your credit at all. What actually affects your score is a hard inquiry, the kind that happens when you apply for new credit. Knowing the difference means you can check your own credit as often as you want without worrying it'll cost you anything.
Myth: Carrying a balance builds credit
This one might be the most expensive myth on the list. Carrying a balance from month to month doesn't build credit any faster than paying it off in full. It just adds interest. What builds credit is consistent, on-time payment and responsible use of the credit you have, not the act of carrying debt itself.
Myth: You need to be in debt to have good credit
Related to the myth above, this one keeps people from paying off cards they could easily clear. Good credit comes from a track record of managing credit responsibly, not from owing money. You can be debt-free and still have excellent credit, as long as you have accounts open and in good standing.
Why myths like these matter
Every one of these misconceptions leads to a real decision, closing a card, carrying a balance, avoiding a credit check, that ends up working against the person following the advice. We'd rather spend time correcting these before they cost you money than after.
Have a myth you've heard and want checked? That's what a consultation is for.
