The world of credit can be a difficult one to navigate for many. Even if you aren’t new to the world of credit, it can sometimes feel impossible to discern credit myths from credit facts.

Understanding how credit works is the best way to build AND maintain a positive credit score.

Come with us as we explore some of the top 3 credit myths so you can take the smarter approach to build your credit.

Myth #1 – You Must Carry a Balance To Build Credit

This myth is 100% false and we’re not totally sure where it came from. Carrying a balance beyond your monthly statement from month to month will only rack up more interest charges and it won’t necessarily raise your credit score quickly.

If you’re looking for a fundamental way to boost your credit score, the best thing to do is make a couple of small purchases every month and pay off your balance in full as quickly as you can. With this strategy, you can keep your card active while showing creditors that you are responsible with your finances.


Myth #2 – You Can Obtain an Excellent Score By Paying Off Your Balance Each Month

If you use more than 30% of your credit limit during the month, you will negatively impact your credit score, regardless of if you pay the full balance off or not.

Why is this, you ask?

Well, credit utilization makes up 30% of your credit score. If you have high debt relative to your credit utilization, your score will be negatively impacted. Your credit utilization is the balance on your card compared to the total amount you have available.

It’s important to remember that credit scoring models calculate credit utilization ratio using only revolving accounts, including personal lines of credit and credit cards, which don’t have fixed payment numbers. Your vehicle loans, student loans, or installment loans, are not part of the credit utilization ratio equation.

Top 3 Credit Myths YOU Need To Know for 2021
Top 3 Credit Myths YOU Need To Know for 2021

Myth #3 – Paying Off Debt Removes Late Or Missed Payments From My Account

This is certainly not always the case. A late payment could sit on your credit report for up to seven years from the time you missed the payment. Even when you pay off your debt, it could remain on your report.


Final Thoughts

It is important to remember all of these myths so that you aren’t quick to believe everything people tell you about credit scores.

The good thing is, there are many time-tested credit techniques that exist out there, one of which we provide consumers with every day. We’re talking about tradelines.

Here at Boost Credit 101, we specialize in helping people like you potentially raise their credit scores with high-quality tradelines. If you’re interested in how you can use tradelines to positively impact your credit score, get in touch with us at Boost Credit 101 today!