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Several credit myths persist that can mislead consumers about their creditworthiness and financial decisions:
1.
*Closing Credit Cards Improves Your Credit Score:* Closing cards can actually decrease your available credit, potentially increasing your credit utilization ratio and lowering your score. 2.
*Checking Your Credit Hurts Your Score:* Checking your own credit (soft inquiry) does not impact your score. Only hard inquiries from lenders can affect it, and even then, minimally. 3.
*Carrying a Balance Boosts Your Score:* Carrying a balance does not improve your score. Paying off balances in full and on time demonstrates responsible credit use. 4.
*Income Affects Your Credit Score:* Your income is not included in credit reports or scores. Credit scores are based on credit history, payment behavior, and debt levels. 5.
*Closing Accounts Removes Them from Your Report:* Closed accounts with positive history remain on your report for years and can still positively impact your score. 6.
*Debit Cards Build Credit:* Using a debit card does not build credit. Credit activity, such as using credit cards responsibly, is necessary to build and maintain a credit history.
Understanding these myths can help consumers make informed decisions and effectively manage their credit to achieve financial goals.
Several credit myths persist that can mislead consumers about their creditworthiness and financial decisions:
1.
*Closing Credit Cards Improves Your Credit Score:* Closing cards can actually decrease your available credit, potentially increasing your credit utilization ratio and lowering your score. 2.
*Checking Your Credit Hurts Your Score:* Checking your own credit (soft inquiry) does not impact your score. Only hard inquiries from lenders can affect it, and even then, minimally. 3.
*Carrying a Balance Boosts Your Score:* Carrying a balance does not improve your score. Paying off balances in full and on time demonstrates responsible credit use. 4.
*Income Affects Your Credit Score:* Your income is not included in credit reports or scores. Credit scores are based on credit history, payment behavior, and debt levels. 5.
*Closing Accounts Removes Them from Your Report:* Closed accounts with positive history remain on your report for years and can still positively impact your score. 6.
*Debit Cards Build Credit:* Using a debit card does not build credit. Credit activity, such as using credit cards responsibly, is necessary to build and maintain a credit history.
Understanding these myths can help consumers make informed decisions and effectively manage their credit to achieve financial goals.