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Credit cards aren't always a bad thing.

With something as crucial to your financial well-being as your credit score, you may get a little uneasy just thinking about it — especially considering that some blunders (even those made with the best intentions) could have a negative impact.

A lot of this nervousness is caused by the seemingly puzzling way scores are calculated, and when something is mystifying there’s bound to be a lot of well-meaning speculation and misinformation out there; making conditions murkier.

To help you gain some clarity on credit scores so you can improve yours, we’ve debunked the credit score myths we hear most.

MYTH #1: Avoid credit cards. Use only debit and pre-paid cards, instead.

This myth stems from fears that carrying a credit card will ultimately lead to damaging credit card debt. While it’s true that using a credit card irresponsibly (i.e. maxing it out or not paying your bills on time) will hurt your score, it’s also true that using a credit card wisely is one of the fastest ways to establish a good credit history. Simply follow these guidelines for smart credit card use and watch your number grow:

  • Pay your balance in full and on time every month.
  • Don’t charge more to your card then what you can reasonably make a plan to pay off immediately.
  • Rely on your emergency savings for emergencies, not your credit card.
  • Avoid maxing out your credit cards.
  • Limit the total number of cards you apply for and carry.

MYTH #2: Carrying a balance on your card helps your score.

Carrying a low balance on your credit card month-over-month won’t necessarily hurt or improve your score. It simply costs you money over time because you’re paying interest on that balance.

When you have a credit card, the best thing you can do is pay your balance off in full every month. This ensures that your debt balance doesn’t get out of control and you’re not throwing money away on interest.

MYTH #3: You can improve your score by closing credit card accounts you don’t use.

Open accounts can help.

The number of credit cards you keep open with zero balances doesn’t negatively impact your credit score, but your total credit utilization ratio (your available credit compared to how much you owe) makes up nearly a third of your overall score. Therefore, keeping accounts open that you’re not using can actually have a positive impact, because it keeps your credit utilization ratio lower. While closing those accounts, on the other hand, decreases your available credit — increasing your credit utilization ratio.

MYTH #4: You only need to check your credit report if you know you have credit problems or don’t pay your bills on time.

All too often we hear about data breaches big and small happening to retailers where we use our credit cards and at institutions we entrust with our personal data. This alone is a reason to keep a watchful eye on your credit report. This way you can look for indications of fraud or vendor errors, and take action to protect yourself and make corrections sooner rather than later.

The worst time to learn about errors or fraud impacting your credit is when you’re to applying for a mortgage or auto loan. Don’t get caught off guard. Check your credit report regularly, no matter how diligent you are at paying your debts.

MYTH #5: Paying off negative debt removes it from my credit score.

Your credit score is made up of your credit history — whether the individual records are good, bad or ugly. So you can expect negative marks such as late payments, collection accounts, discharges and bankruptcies to reflect on your score for seven to 10 years. It’s also important to note that if you have an account that has been delinquent for several years, the moment you make a payment on it you start the clock to have it fall off your score all over again.

Whether you’re starting from scratch, looking to turn around a bad score or simply want to give your credit a boost, it’s always important to have a plan. If you need help putting your plan in place, stop by your nearest branch and have a conversation with a crewmember. They’ll help steer you toward the path of financial freedom.

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