Knowing the Truth About These Credit Score Myths Can Help You Improve Your Credit


This article is reproduced with permission from NerdWallet.

When the COVID-19 pandemic hit last year, people were overwhelmed by the logistics of sudden, rapid stay-at-home orders. Between school closures, supply shortages and new ways of working, there was little time for anything else. As many have adjusted their spending habits, they’ve also taken the time to think more critically about their finances — and some of the government-mandated credit grants have made credit monitoring a particularly good idea.

A new NerdWallet survey conducted online by The Harris Poll in September asked more than 2,000 Americans how they managed their credit score during the pandemic, as of March 2020.

Respondents were also asked to identify common misconceptions about credit scores. The results reveal that there’s a lot of credit misinformation out there, but it’s possible to break through the fog and boost your score. The first step is to bust the myths.

Myth: Checking Your Credit Score Will Hurt It

Although the survey shows that nearly 2 in 5 Americans (39%) believe that checking their own credit score can lower it, this is not the case.

The confusion could stem from the two types of credit checks, called inquiries. Your score is not affected when you verify it yourself or when a lender verifies it to prequalify you for card offers and for other marketing purposes. This is called soft requests.

The other type, a serious request, occurs when a lender checks your credit because you have applied for a new line of credit. Thorough investigation may drop your score by a few points, but the effect is only temporary.

Regularly checking your own score allows you to monitor your credit and spot signs of trouble early on.

Read: Major retailers are now using “buy now, pay later” plans that don’t charge you a fee. Should you take advantage of it?

Myth: Your credit score is on your credit report

Survey results reveal that about 8 in 10 (82%) Americans mistakenly believe their credit report includes a credit score. They are two different tools, even if they are closely related.

Your credit report contains details of your past credit usage and other personal and financial information. Your credit score, on the other hand, is based on data from your credit report. This score, usually on a scale of 300 to 850, helps potential lenders assess the risk of granting credit.

You have access to your two:

  • Credit report: You are entitled to a free credit report each week from each of the three major credit bureaus, and using is the best way to request them. Reading your credit reports and challenging errors are good financial habits.
  • Credit score: Many personal finance and banking websites offer a free credit score that you can use to track your progress.
Myth: Having a small balance on credit cards improves your score

According to the survey, nearly half of Americans (47%) think having a small balance on a credit card is better for their credit than paying it off every month. But all this only costs you interest. Paying off your balance in full can also help prevent your debt from climbing beyond your means.

If you want to increase your score, try this approach instead: make a few smaller payments each month or one-time payments with a paycheck or other cash infusion. Continually reducing card balances instead of waiting for the monthly bill helps keep your credit usage low, which has a big influence on scores.

Also see: A simple credit card with a lump sum refund is a good way to establish yourself and find out if credit cards are right for you.

So what is true about partitions and how do you build them?

A few proven strategies will help you build your credit. Here’s how to focus your actions on the most important score factors.

Pay on time every time

Paying bills on time is essential to establishing or maintaining strong credit, as payment history is the single most important factor in credit scores. In fact, a payment that’s 30 days or more past due can drop a good credit score by 100 points.

If you’re struggling to manage multiple due dates, try automating your payments — or at least the minimum payments — so you don’t miss one.

Use credit lightly

Using no more than 30% of your credit limits is another key to building a solid credit score, although staying below 10% is ideal. Take control of your credit usage by keeping your credit limits in mind when spending. Two strategies that can help you stay under 30% are tracking your spending and setting balance alerts. Requesting a credit limit increase is another option to consider.

Pay off your card balance in full each month

Paying off your credit cards each month saves you interest and can help you avoid overspending. If it’s difficult to pay your balance once a month, try making smaller payments several times a month.

Keep your oldest credit accounts open

The longer your credit history, the less risky you appear to potential lenders. Keeping your old credit accounts open is a great way to show that you have a long and established credit history.

Read next: Companies have a new weapon in the hunt for talent: free university degrees. Why it’s important to read the fine print.

If you’re new to credit, you can request to be added as an authorized user on someone else’s credit card account. Choose someone who has an established account and an excellent credit rating. This person’s account history and credit limits will be added to your credit reports.

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Amanda Barroso writes for NerdWallet. Email:


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