5 Credit Card Myths That Are Hurting Your Finances (Debunked!)

Credit cards are one of the most misunderstood financial tools out there. With so much misinformation floating around, it’s easy to fall for myths that can hold you back from building strong financial habits.

Whether you’re afraid to use credit, unsure how it impacts your score, or hesitant about opening new accounts, it’s time to set the record straight. Let’s debunk five of the biggest credit card myths so you can use credit wisely and to your advantage.

Myth #1: Carrying a Balance Improves Your Credit Score

One of the most common myths is that you need to carry a balance on your credit card to build credit. Many people believe that leaving a small balance each month shows lenders you can manage debt responsibly.

🚨 Reality Check: This is 100% false. Carrying a balance doesn’t help your score—in fact, it can hurt it. The two biggest factors in your credit score are payment history (35%) and credit utilization (30%).

How This Hurts You:

• Carrying a balance increases your credit utilization ratio, which can lower your score.

• You’ll end up paying unnecessary interest, even if your balance is small.

• If your balance gets too high, lenders may see you as financially overextended.

The Right Move:

✅ Pay your balance in full every month to avoid interest.
✅ Keep your credit utilization below 30%—below 10% is even better.
✅ Use your card for small purchases, then pay it off before the due date.

Myth #2: Checking Your Credit Score Will Hurt It

Many people avoid checking their credit score because they think it will lower their score. This myth often comes from confusion between hard inquiries and soft inquiries.

🚨 Reality Check: Checking your own credit does NOT hurt your score! This is called a soft inquiry, which has zero impact.

What Actually Hurts Your Score?

• Applying for too many credit cards at once (each application results in a hard inquiry, which can temporarily lower your score).

• Taking out multiple loans in a short period.

The Right Move:

✅ Monitor your credit regularly to track progress and catch errors early.
✅ Use free services like Experian, Credit Karma, or your bank’s credit monitoring tool.
✅ Space out credit applications to avoid multiple hard inquiries at once.

Myth #3: A Higher Income Means a Higher Credit Score

Some people assume that a bigger paycheck automatically leads to a better credit score. After all, if you make more money, shouldn’t lenders trust you more?

🚨 Reality Check: Your income is NOT a factor in your credit score. Credit scores are based on how you manage credit, not how much money you make.

What Actually Matters?

• On-time payments: The more consistently you pay on time, the higher your score.

• Credit utilization: Keeping balances low helps boost your score.

• Credit history length: The longer you’ve had credit, the better.

The Right Move:

✅ Even if you make more money, focus on responsible credit use.
✅ Build a habit of paying off your balance in full every month.
✅ Avoid maxing out cards, no matter how much you earn.

Myth #4: Closing Old Credit Cards Helps Your Credit Score

If you pay off a credit card, you might think closing the account will boost your score. But in reality, closing an old account can actually hurt your credit score.

🚨 Reality Check: Closing a credit card lowers your available credit and shortens your credit history length—both of which can negatively impact your score.

Why This Hurts You:

• Lowers your credit limit: If you close a card with a $5,000 limit, your total available credit decreases, increasing your credit utilization.

• Shortens credit history: Length of credit history is 15% of your score, and closing an old card reduces your average account age.

The Right Move:

✅ Keep old credit cards open, even if you don’t use them.
✅ If your card has an annual fee, ask your issuer to downgrade to a no-fee version.
✅ Use old cards for small purchases every few months to keep them active.

Myth #5: You Only Need One Credit Card

Some people believe that having multiple credit cards is bad for your credit score. While having too many cards can be risky if mismanaged, having just one credit card can actually limit your credit score potential.

🚨 Reality Check: Having multiple credit cards can improve your score by:

• Lowering credit utilization: More available credit = lower utilization ratio.

• Increasing credit mix: Lenders like to see a diverse mix of credit accounts (credit cards, loans, etc.).

• Providing more rewards and benefits: Different cards offer perks like cash back, travel points, and purchase protection.

The Right Move:

✅ Start with one or two cards and manage them responsibly.
✅ If you apply for a new card, space out applications to avoid multiple hard inquiries.
✅ Choose credit cards that align with your spending habits and financial goals.

Final Thoughts: Take Control of Your Credit the Smart Way

Now that we’ve busted these common credit card myths, you’re in a better position to make smarter financial decisions. Credit cards aren’t the enemy—they’re a tool that, when used wisely, can help you build wealth, improve your credit score, and unlock financial opportunities.

If you’re serious about improving your credit and want expert guidance, I’m here to help.

📅 Schedule a FREE 15-minute strategy call today!
👉 https://calendly.com/consultwitherika/15-min-strategy-call