Credit Myths That Are Quietly Costing You Money

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Credit myths are one of those things that can either work for you or slowly drain your wallet, depending on what you actually understand about it. The problem? A lot of what people “know” about credit is flat-out wrong.
These myths get passed around like facts. Your parents believed them. Your friends repeat them. And following them might be costing you real money right now, in the form of higher interest rates, denied applications, or unnecessary fees.

Here are six credit myths worth unlearning.

Myth #1: Checking Your Credit Score Hurts It

This one keeps people in the dark about their own finances. They’re afraid to look, so they don’t, and problems pile up unnoticed.
Checking your own credit score is a “soft inquiry.” In fact It doesn’t affect your score at all. Hard inquiries (the kind that can ding your credit) only happen when a lender pulls your report because you’re applying for a loan, credit card, or mortgage.
Furthermore, monitoring your score through a free app or your bank? Totally safe. In fact, checking regularly helps you catch errors and spot problems before they get expensive.

Myth #2: Carrying a Balance Helps Your Credit

Some people think leaving a balance on their credit card proves they’re a responsible borrower. They’ve heard you need to “show activity” or “prove you can manage debt.”
However, this credit myth is backwards. Carrying a balance doesn’t help your score. It just costs you interest. What actually matters is your payment history: paying on time, every time. You can do that while paying your balance in full each month.

Instead, pay it off. Skip the interest charges. Your score will thank you.

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Myth #3: Closing Old Accounts Improves Your Credit

It feels tidy. You have a card you never use, so you close it. Clean slate, right?
Actually, not quite. Two things happen when you close old accounts:

  1. Your credit history gets shorter. Length of credit history is part of your score. Older accounts help.
  2. Your credit utilization goes up. If you close a card with a $5,000 limit, you just reduced your total available credit, making any existing balances look larger as a percentage.

If an old card has no annual fee, consider keeping it open. Use it once every few months for a small purchase, then pay it off. It continues working for you in the background

Myth #4: Your Income Directly Affects Your Credit Score

Higher income should mean better credit, right? It seems logical.  But credit scores don’t factor in your salary at all.
They measure how you manage the credit you have, not how much you earn.   Someone making $40,000 who pays bills on time and keeps balances low can easily have a better score than someone making $150,000 who misses payments or maxes out cards.

Focus on behavior, not income. That’s what the score actually tracks.

 

Pay Rent. Build Credit.
Earn Rewards. Do Good.

Myth #5: You Need Debt to Build Credit

This credit myth traps people into carrying balances or taking out loans they don’t need, thinking it’s the only path to a good credit score.

You don’t need to stay in debt to build credit. A single credit card, used for regular purchases and paid off monthly, builds payment history just fine. You’re proving you can borrow responsibly without paying interest for the privilege.
For renters, there’s another option: rent reporting services can add your on-time rent payments to your credit history. You’re already paying rent. Might as well get credit for it.

Myth #6: Credit Is Only About Loans and Credit Cards

Most people think of credit as something that only involves banks: loans, credit cards, maybe a mortgage. But that’s changing.
Historically, rent payments weren’t reported to credit bureaus. Now they can be. If you’re a renter, this is one of the most overlooked ways to build credit without taking on new debt.
Services that report rent to credit bureaus turn a bill you’re already paying into a credit-building tool. It’s especially useful for people who don’t have a long credit history yet,
or who are rebuilding after a rough patch.

Final Hoot of Wisdom

Credit myths stick around because they sound reasonable. But believing them can cost you in terms of interest, denied applications, larger deposits, and stress.

The fixes aren’t complicated:

  • Check your score regularly (it won’t hurt it)
  • Pay off balances instead of carrying them
  • Keep old accounts open if there’s no fee
  • Know that income doesn’t drive your score; behavior does
  • Build credit through what you’re already paying, like rent

Your credit score isn’t some mysterious number controlled by forces beyond your reach. It’s a reflection of habits. Change the habits, change the score.