Posted by: John S Kiernan

There are many credit score myths out there, unfortunately, ranging from the notion that there’s one “real” credit score (there isn’t) to the idea that credit scores don’t change very often (they do).

Such misinformation can be quite frustrating, not to mention costly. And that’s especially true when you’re working to improve your credit score, whether it’s from previous mistakes or a clean slate. Building a good or excellent credit score is hard enough without bad information leading you astray, after all.

To help put you on the path to a better credit score and, ultimately, top Wallet Fitness®, we decided to dispel some common credit-improvement misconceptions. So no matter what you may have heard, the following ideas about how to improve your credit score should not to be trusted.

Common Credit Score Myths:

1. You Need Credit to Get Credit
2. Checking Your Credit Report Hurts Your Score
3. You Have to Make Purchases to Build Credit
4. Income Affects Your Credit Score
5. Not Paying Credit Card Bills in Full Helps Your Credit
6. Closing Old Accounts Will Improve Your Credit Score
7. You Can Pay to ‘Clean Up’ Your Credit Report
8. You Can Pay to Improve Your Credit Score

Below, you can learn the truth about each of these issues. And your credit will be better off because of it.

Myth 1: You Need Credit to Get Credit

Fact: You need a loan or line of credit reporting your account activity to the credit bureaus on a monthly basis to improve your credit score. Most require some previous credit experience, but if you don’t have any, you can begin building a credit history with a secured credit card. Secured cards offer nearly guaranteed approval because they require a refundable security deposit, which doubles as your spending limit.

Alternatively, if you have an active college or university email address, you can get a student credit card. Student cards are built for people with limited or no credit, and they tend to offer pretty attractive terms.

Myth 2: Checking Your Credit Report Hurts Your Score

Fact: No matter how often you check your own credit report, it will not harm your credit score. This results in what’s known as a “soft” credit inquiry.

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In contrast, a “hard” inquiry occurs when a creditor formally checks your report to evaluate your application for credit. And that can temporarily damage your credit score.

Myth 3: You Have to Make Purchases to Build Credit

Fact: Simply having an open credit card that is in good standing will improve your credit score. Making purchases and on-time payments will expedite the process, but locking away a card with a zero balance isn’t a bad idea if you don’t trust yourself to use it responsibly.

Bear in mind, however, that some creditors will close your account due to inactivity if you don’t use it for a prolonged period of time (e.g., one year). So you may want to make a small purchase once in a while and pay the bill in full each time.

Myth 4: Income Affects Your Credit Score

Fact: Credit scores don’t directly consider income, and you can check the ingredients to see for yourself. They’re based on the contents of our credit reports, you see, and you won’t find your income listed there, either.

But your income and assets will affect your ability to borrow. Credit card companies and other lenders must confirm that you’ll be able to pay the bills, based on the funds you have available and the debts you already owe. Both your ability to pay and your credit standing will factor into whether your application is approved or denied.

Similarly, your income can also affect your credit if you find yourself missing payments because you can’t afford the amount due. But building an emergency fund when you’re feeling flush can help you ride out the hard times without damaging your score.

Myth 5: Not Paying Credit Card Bills in Full Helps Your Credit

Fact: According to the myth, customers should leave a small balance on their account every month because it allows their credit card company to charge interest. In other words, interest payments are like a bribe to keep the issuer from considering you a “bad” customer and lowering your credit score. This is simply NOT true!

Credit bureaus track the information that makes up your credit score. Credit card companies merely represent one source of that information and cannot manipulate your credit score based on whether they earn interest revenue from you. So you should always pay your monthly credit card bill in full, especially because credit card interest can be very expensive.

Get Your Free Credit Utilization Grade Myth 6: Closing Old Accounts Will Improve Your Credit Score

Fact: Many people suggest closing old, inactive accounts as a way to improve credit. But doing so could increase your overall credit utilization (the amount of credit you use against your limit) and effectively shorten your credit history if it’s your oldest open account. And as we’ve already covered, a high credit-utilization ratio and seeming “lack” of credit experience lead to a lower credit score.

Myth 7: Debts Don’t Affect Your Credit Once Repaid

Fact: If you have a delinquent loan or line of credit, meaning you’re behind on payments, catching up can help. But it won’t completely erase the damage that’s already been done. In particular, paying what you owe won’t remove the previous missed payments from your credit report. They’ll be there for seven years.

The same is true for debts that charge-off or are sent to collections. Repaying what you owe won’t remove all the negative information associated with those events from your credit report before the records naturally expire. Paying off your debt will, however, remove the threat of a lawsuit. It may also help your credit score a bit, depending on what credit-scoring model is used.

For example, VantageScore 3.0 stops considering collections accounts once they’re paid off, even if they’re still listed on your credit reports. You can check your latest VantageScore 3.0 credit score for free on WalletHub.

Myth 8: You Can Pay to ‘Repair’ Your Credit Score

Fact: We’ve all seen the ads for “credit repair” services that promise miracle fixes to your damaged credit in return for a hefty fee. They’re a rip-off because there are no shortcuts to credit improvement.

Negative records such as late payments will remain on your credit report for seven to 10 years from the date your account became delinquent. That can’t change, unless the records are inaccurate.

So the only thing a credit-repair company might be able to do is get errors removed from your credit reports. But you typically don’t need help to do that. You can easily dispute inaccurate information on your credit report. And if one of the credit bureaus refuses to remove something that’s truly an error, hiring a lawyer will pay far greater dividends than a shady credit-repair scheme.

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Even the most reputable credit-repair organizations will only provide temporary assistance, leaving you with a lot of work to do on your own.

Next Steps

To learn more about the right ways to improve your credit score, check out WalletHub’s credit-improvement guide. You can also get personalized advice by signing up for a free WalletHub account. One of the features of your free account, your customized Credit Analysis, will break down your latest credit score and report, tell you how to fix any problem areas, and even give you an idea of how long that will take. WalletHub is the first and only site to offer free credit scores and reports that are updated on a daily basis.

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