I’ve been hearing a lot about credit scoring myths these days in our Credit Talk forum. You've probably heard many of the ones I'm thinking of too: "quick and easy ways" to magically add points to your credit scores in a short period of time. Usually they're the same ones that have been circulating around for years, like these two favorites:
1.) Close any credit card accounts you don’t use, increase your income, and your credit score will increase too!
2.) Just use cash to pay for everything and your credit will be perfect!
I hope you haven’t fallen for any of these. If you have, I’m happy you're taking the time to visit this site and educate yourself about credit cards and how to use them responsibly. It's definitely a step in the right direction.
Top Credit Score Myth
Many of these credit myths probably began when some ingenious word of mouth marketing campaign was put in place by a highly-paid marketing professional on behalf of a credit card company. My personal favorite is when people actually try to convince me that leaving a monthly balance on their credit cards will make them look like a better credit risk and therefore build their credit score faster.
I have no idea why this one is so easy for people to believe. It just doesn’t make sense. Remember, more monthly balances simply equal more interest income for credit card issuers. Aggregate that additional income from millions of people who believe the rumor, and we are talking about a lot of cash in credit issuers' pockets.
The truth: The speed at which you establish credit has absolutely nothing to do with whether you carry a monthly balance or not. The things that really matter have never changed:
1.) Pay your bills on time
2.) Manage your credit utilization
3.) Pay down debt
4.) Correct errors on credit reports
5.) Apply for new credit sparingly
Do you have any favorite credit card myths you’ve heard from friends and relatives? If so, we would love to hear about them. Leave a comment or check out our credit learning center for more information. Updated August 10th, 2016.