8 Credit Myths That Could Be Holding You Back

When it comes to credit, there’s a lot of misinformation out there. Understanding the facts can help you make smart decisions, build stronger credit and take control of your journey to financial well-being. Let’s clear up a few common credit myths so you can stay focused on what really matters.

Myth #1: Collection Accounts Permanently Hurt Your Credit
Fact: While collection accounts do impact your credit score, they’re not permanent. Once a collection is paid in full, it’s marked as resolved on your credit report. Although the record stays on your report for several years, it shows that the debt was paid—and that can work in your favor over time.

Myth #2: Late Payments Will Always Damage Your Credit
Fact: A late payment can hurt your score, but not forever. Creditors typically report late payments after you’re 30 days past due. If you catch up before then, you may only face a fee, not a mark on your credit report. And even if a late payment does show up, its impact lessens over time.

Myth #3: Checking Your Credit Score Hurts It
Fact: Checking your own credit score is a smart habit, and it doesn’t affect your score. This type of check is called a “soft pull” and has no impact. “Hard pulls,” which happen when you apply for a loan, can slightly lower your score. Monitoring your score regularly helps ensure accuracy and catch any signs of identity theft early.

Myth #4: Utility Bills Help Build Credit
Fact: Most utility bills don’t get reported to the credit bureaus unless they go unpaid and end up in collections. Paying them on time is still important, but don’t rely on utilities to build credit history. For that, you’ll need to use credit cards or loans responsibly.

Myth #5: Credit Cards Are Bad for Your Credit
Fact: When used responsibly, credit cards can help build your credit. Keep your balances low (ideally under 30% of your credit limit), pay on time and avoid carrying large amounts of debt.

Myth #6: Your Credit Score Is All That Matters to Lenders
Fact: While your credit score is important, it’s not the only factor that matters to lenders. They’ll also look at your full credit report, income, debt-to-income ratio and payment history. A strong credit file includes both a good score and a positive payment track record.

Myth #7: Closing Old Credit Cards Won’t Hurt Your Score
Fact: Closing an old credit card can shorten your credit history and increase your credit utilization ratio, both of which can lower your score. If possible, keep older cards open and use them occasionally to keep them active.

Myth #8: Having No Credit Is Better Than Having Credit
Fact: Having no credit history can make it harder to qualify for loans or get competitive rates. Building credit over time through credit cards, auto loans or other products shows lenders that you can manage financial obligations responsibly.

Build Confidence Through Credit Knowledge
Understanding how credit works is key to improving your financial well-being. Don’t let myths or misinformation hold you back! With the right knowledge and tools, you can take control of your credit and work toward your financial goals.

If you have any questions, we’re here to help. Chat with us online, call 800.856.7328 or visit your local branch to get started.