Nearly half of Americans think leaving a balance on their credit card is better for their score than paying it off. Wrong.
Financial misinformation is rampant, and it could be hurting your credit score. A new NerdWallet survey finds that Americans hold many misconceptions about their credit, some of which could seriously damage their scores. Here are three common credit score myths and how to guard against them.
Myth 1. Leaving a balance on your credit card is good for your score This is a sticky credit myth: Nearly half of Americans think leaving a balance on their credit card is better for their score than paying it in full, according to the survey. But carrying a balance doesn’t help your credit and can, in fact, be harmful if the balance is a large percentage of your available credit limit. That’s because it increases your credit utilization , which significantly influences your score.
You can combat this by paying off your balance on or before the due date, which may lower your credit utilization and monthly costs.Myth 2. Closing a credit card you don’t use is good for your credit The survey found that close to half of Americans think closing a credit card they no longer use can help their credit score. Keeping a financial product you aren’t using seems counterintuitive, but closing a credit card can damage your score.
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