Sometimes the best of intentions can lead to the worst results — especially by following bad but well-intentioned advice on how to improve your credit score.
While not meant to be bad advice, some widely held thoughts on improving credit are actually credit card myths that could hurt your credit score more than help it. Some credit card myths are just downright odd.
Here are 11 credit card myths that we’ve debunked so they don’t hurt your credit score:
1. Canceling credit cards boosts my credit score
At face value, doing this makes sense. Getting rid of debt and then cutting up your credit cards and canceling them can serve as a final act of victory.
But it doesn’t work that way, says Thomas Nitzsche, a spokesman for ClearPoint Credit Counseling Solutions. While it can be psychologically therapeautic, closing the account actually damages the credit score, especially if it’s one with a long, good payment history, Nitzsche says.
Canceling credit cards can hurt a credit score by a few points decreases your debt-to-available credit ratio, says Leslie Tayne, a financial attorney and debt specialist.
“The more cards you close in a short period of time, the bigger drop you are likely to see in your credit score,” Tayne says.
2. Too many inquiries hurt
“While a lot of inquiries can drop your score a few points, this phenomenon is largely inflated,” Nitzsche says. “Most scoring models actually allow inquiries within a certain timeframe to just be considered one inquiry.
“The reason for this is that, for example, when shopping for a car the dealer is likely to try to get you financed with multiple banks. It would be unfair for the consumer to be dinged for this. If you have credit with a company, their risk management department pulls your credit regularly to check on your financial health with no change in score,” also called a “soft pull.”