The Worst Credit Score Advice Experts Have Ever Heard

Some bad advice you receive is NBD, honestly. Those bangs your best friend swore would look great on you will eventually grow out after an awkward phase. And maybe one day Dad’s method of filling out a March Madness bracket based on team mascots will actually pay off.

But then there’s some bad advice that qualifies as a VBD—yes, a very big deal because it concerns your financial well-being.

Establishing and maintaining a solid credit score isn’t just key when it comes to qualifying for a good interest rate on a credit card. That almighty three-digit number attached to your identity can determine whether you need to put down a security deposit on utilities and if you can qualify for a mortgage (and do so at a low interest rate). So, when you get dealt some bad credit advice, yeah, it can sting.

Here, finance experts reveal some of the worse nuggets of credit advice they’ve heard—and share what to do instead:

Bad advice: You need to carry a balance to build credit

A recurring misconception that personal finance expert Jackie Beck often hears is that you need to carry a balance on your credit cards to boost your score.

“There’s no need to pay interest like that, and it’s sad to see people going into debt thinking they’re doing something positive,” she says.

A better idea? Simply set up a small, recurring charge (think: Netflix subscription) to the card each month, Beck suggests. Then, have the charge automatically paid in full before the due date every month.

On-time payments make up 35 percent of your credit score, points out Nathan Grant, an analyst with Credit Card Insider, a comparison site for consumer credit cards. With that in mind, paying off your balance each month will have a positive impact on your score and help ensure you don’t become saddled with interest payments, Grant explains.

If you can’t pay off your balance every month, the next best thing is to keep your balances under 30 percent. Once you go above that percentage, creditors are cautious as it signals you’re overextended.

Bad advice: A credit repair company can magically erase all your negative history

You know the expression: If it sounds too good to be true, it probably is. So be mindful if a company promises to completely clean up your credit, warns finance expert WenFang Bruchett, author of “The C.A.S.H. Formula” (an acronym for Credit, Assets, Savings, and Health).

“If you are late paying bills, no one can permanently remove that delinquency from your records,” she says. The only way late payments can be removed from a credit report is if they are seven years old—or, of course, if it’s a mistake.

Bruchett has advised clients to instead pull credit files from three credit bureaus via annualcreditreport.com and check for any discrepancies. “Then dispute any errors by yourself by providing support documentation,” she says.

Bad advice: Close your credit cards once you pay them off

When you close your credit card, you are impacting your utilization rate, which is how much credit you are using versus how much credit you have, explains Atiya Brown, certified public accountant and finance expert of The Savvy Accountant. An open card with a low balance is going to play in your favor when it comes to credit utilization. Also, closing your card can negatively impact the age of your accounts, which makes up 15 percent of your credit score, Brown says. Creditors like to see aged accounts that you’ve been making regular, on-time payments on.

Bad advice: You should constantly monitor your credit

This is a bad habit to get into, warns David Bakke, a personal finance expert at Money Crashers. It’s tempting with the availability of credit-monitoring services, but you really shouldn’t be babysitting your score and logging in to check it every time you make a payment, pay off a balance, or open a new account just to see the effect on your score, Bakke advises. This can lead to unnecessary stress, he says, plus your financial moves don’t have a same-day effect on your score. So what’s a sweet spot: responsible, but not obsessive?

“Checking your score about once a month should be about right,” Bakke says.

Bad advice: Adding your spouse on your accounts doesn’t affect your credit

First comes love, then comes marriage… then comes a joint account? Be careful with this one because when you add your spouse to an account, the bank will treat both account holders with equal responsibility, explains Andy Taylor, general manager of mortgage at Credit Karma, a personal finance site that offers free credit score estimates. On a similar note, authorized users may not be responsible for the debt, but the account may be listed on their credit report, too, which could affect their scores, Taylor explains.

“Joint accounts and authorized users may be listed on both people’s credit reports, so both of you need to try your best not to miss any payments or have the account sent to collections as these situations could cause both of your credit scores to drop,” he says.

Bad advice: It’s OK to max out your card, so long as you pay off the balance soon

Using a large portion of your credit limit may negatively affect your credit score, says Taylor. Your credit utilization—the amount of debt on your credit cards divided by the total of all your credit limits—is one of the biggest factors of your credit score, he says. However, some credit agencies may ding your score if just one of your cards has a high utilization rate. Because of this, Taylor says it’s best to keep the balances of all your credit cards under 30 percent. “Decreasing your credit utilization is often the easiest way to improve your credit,” he says.

Now that you’ve dodged some bad credit advice, be sure to watch out for these misguided mortgage myths.

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