You’ve probably heard some wild stuff about credit scores that you weren’t sure whether or not were true. We want to help credit become less of a mythological beast, and help clear up some common misconceptions.

Myth #1 – Carrying a credit card balance is good.

Having a balance – ANY balance – will still incur interest charges. Carrying a balance over 30% of your limit – called utilization – will lower your credit score. Try to pay off your card every month if possible.

Myth #2 – Using a credit repair agency is beneficial.

Legally, no agency can remove negative information on your report if it belongs to you, no matter what they say. Everything that can be done to repair your score can be done by YOU. If there is incorrect information on your report, you can file a claim or dispute the wrong information yourself with the credit bureaus. Don’t pay someone else to do something you can do for free.

Myth #3 – Employers can see your credit score.

Employers in many states CAN see your credit report – but that’s different than your credit score.  Only lenders, landlords, and utility companies can see your score to determine whether or not you’re a risk. Employers can only see your credit report to see if there are any indications of untrustworthiness or unsavory financial behavior that could have an affect of the information you’ll have access to as an employee.

Myth #4 – Your credit score will drop if you check your credit.

Checking your own score is counted as a “soft inquiry,” and will not affect your credit at all. Only “hard inquiries” from lenders can bring your score down a few points – and if you’re shopping around for best rates on the same loan, several inquiries in a short amount of time appear as smart money-saving behavior, so they’ll be lumped together and only count as one inquiry.

Myth #5 – Closing an old account is a good idea.

Your credit score is partially calculated on how long your accounts have been open. Even if you never use your oldest account, don’t close it – it will make your credit history appear shorter. Close a newer account if necessary.

Myth #6 – Co-signing for someone else won’t show up on your report.

Any activity on a co-signed account will show up on both people’s credit, good or bad. If you co-sign for a friend, make sure they’re trustworthy, because if they miss a payment, you’ll get dinged for it too. You can have the lender remove you from the account or refinance the loan if you no longer want to be legally responsible on the account.

Myth #7 – Negative records are removed from your report once paid off.

Nope. Negative records, like collections, bankruptcies, or late payments stay on your report for 7 to 10 years. Paying off the account will mark it as “paid,” which looks better to lenders than if you still owe, but beware that it will still show up on your report.

Myth #8 – The more money you make, the better your credit score.

No information regarding income or assets are on your report – those numbers don’t affect your score at all. Credit bureaus don’t care how much money you make – they’re only interested in whether or not you pay back on time, and in full.

Do you have any credit questions that we can help clear up?