Your credit score is more than just a number—it’s a key that unlocks financial opportunities, from securing a mortgage to landing a low-interest car loan. But when it comes to repairing or improving your credit, misinformation can be your worst enemy. Many people fall victim to common credit repair myths, often making decisions that hurt their scores instead of helping them.
In this blog post, we’ll debunk seven of the most pervasive credit repair myths and set the record straight so you can take control of your financial future.
Your credit score is your financial reputation. Treat it with care, pay your bills on time, and avoid unnecessary debt to build a strong, trustworthy profile.
Kevin Smith
Financial Adviser
Myth 1: Closing Old Credit Cards Will Boost Your Score
It’s tempting to close old or unused credit cards, especially if you’re trying to simplify your finances. However, closing an account can actually lower your credit score. Why? Because it reduces your overall available credit, which increases your credit utilization ratio (the amount of credit you’re using compared to your total limit). Additionally, closing an old account can shorten your credit history, which is a factor in your score.
What to do instead: Keep old accounts open, even if you don’t use them often. Just make sure there are no annual fees.
Myth 2: Checking Your Credit Report Will Hurt Your Score
Many people avoid checking their credit reports because they fear it will ding their score. This is a myth! When you check your own credit report, it’s considered a “soft inquiry,” which doesn’t affect your score at all. In fact, regularly reviewing your credit report is a smart habit—it helps you spot errors or signs of identity theft early.
What to do instead: Check your credit report at least once a year (you’re entitled to a free report from each of the three major bureaus annually) and dispute any inaccuracies.
Myth 3: Paying Off a Debt Will Remove It From Your Credit Report
Paying off a debt is a great step, but it doesn’t automatically erase the record from your credit report. Negative items, like late payments or collections, can stay on your report for up to seven years, even after they’re paid.
What to do instead: Focus on building positive credit habits, like paying bills on time and keeping balances low, to offset past mistakes. Over time, the impact of negative items will diminish.
Myth 4: You Need to Carry a Balance to Build Credit
Some people believe that carrying a balance on their credit cards shows lenders they’re responsible borrowers. Not true! Carrying a balance only leads to unnecessary interest charges. What really matters is paying your bills on time and keeping your credit utilization low.
What to do instead: Pay off your credit card balance in full each month to avoid interest and demonstrate responsible credit use.
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Myth 5: Credit Repair Companies Can Erase Bad Credit Overnight
Credit repair companies often promise quick fixes, but there’s no magic wand for credit repair. Legitimate improvements take time and effort. Some companies may even engage in unethical practices, like disputing accurate information, which can backfire and harm your credit further.
What to do instead: Take a proactive approach by addressing errors on your report, paying down debt, and practicing good credit habits. If you need help, consider working with a reputable credit counselor.
Myth 6: Your Income Affects Your Credit Score
Your income isn’t a factor in your credit score. Whether you earn 30,000or300,000 a year, it doesn’t directly impact your score. What matters is how you manage your credit—paying bills on time, keeping balances low, and avoiding excessive debt.
What to do instead: Focus on managing your credit responsibly, regardless of your income level.
Myth 7: Bankruptcy Ruins Your Credit Forever
Bankruptcy is a serious financial decision, and it does have a significant negative impact on your credit score. However, it’s not the end of the road. Most bankruptcies stay on your credit report for seven to ten years, but you can start rebuilding your credit immediately afterward.
What to do instead: After bankruptcy, focus on rebuilding your credit by opening a secured credit card, making timely payments, and keeping your credit utilization low. Over time, your score will improve.
Final Thoughts
Credit repair isn’t about quick fixes or shortcuts—it’s about understanding how credit works and making informed decisions. By debunking these common myths, you can take control of your credit health and work toward a stronger financial future.
Remember, improving your credit score is a marathon, not a sprint. Stay patient, stay informed, and don’t let myths steer you in the wrong direction. Your financial well-being is worth it!
Disclaimer: This article is for informational purposes only and is not a substitute for professional financial advice. If you have specific concerns about your credit, consult a financial advisor or credit counselor.