5: Credit scores reward you for debt
Truth: Credit scores significantly reward consumers who do not have any debt, especially consumers with zero credit card debt. And, credit scoring models punish consumers who have too much debt.
The idea that you need to carry a lot of debt to have good credit scores is completely false and is perpetrated by those who either don’t understand credit scoring systems or have a bone to pick with them.
This particular credit myth has become a very popular one due to the fact that many self-proclaimed “financial gurus” on TV and radio like to spread the false idea that you have to be in debt in order to have higher credit scores.
A whopping 30% of the points in FICO and VantageScore credit scores are driven from the amount of debt on credit reports. The fewer accounts you have with balances, the better it will be for your credit scores. The more debt you have and the more accounts with balances, the lower your scores will be.