To maximize your score, always pay your installment loans (like car loans and mortgages) on time and in full. "If you pay a student loan a day late, your score can go down as much as 100 points." So much for that degree making you smarter. Reality: "Missing a payment is the biggest way to hit your credit score," Lowry says. Myth #2: It's OK to pay credit cards a day late if you pay them off in full. That's why Erin Lowry, who writes the "Broke Millennial" blog, believes banks and credit card companies probably perpetuated this myth to boost their profits. The only thing a running balance increases is the interest you owe. Reality: The credit score gods want to know two main things: that you pay your bills on time, and that you don't constantly max out the credit you have.Īnd yes, one of the items they like to see you pay is your credit card bill - all of it. Myth #1: Always carry a small balance on your credit card. Here are seven top credit score myths, and the reality behind them. Unless you have us to dig for you, that is. "There are quite a few myths and misinformation about credit scores," says Ryan Greeley, author of the "Better Credit Blog." "This stuff isn't taught anywhere, so it's something you have to dig into yourself." The worst time to find out you've got a going-nowhere credit score is when you're trying to buy a home.
Forty percent of us think our credit score will climb if we carry a small balance (nope), and 52% don't realize bad credit can increase the amount needed for deposits on utilities (it does!), according to a NerdWallet survey.
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