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Simply Money

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Debunking 3 Common Credit and Debt Myths

here are 3 common credit and debt myths that need to be debunked, once and for all.

1) Checking Your Credit Report Will Lower Your Score

No, it won’t. According to Experian, more than 40 million Americans have bogus information on their credit reports. Some of these errors remain in place because people fear that checking their own reports will hurt their score. That is totally false.

Federal law stipulates that you are entitled to one free report a year from each of the three main credit reporting agencies (EquifaxExperian, and TransUnion). Ordering your own report is a “soft inquiry” that will not impact your credit, no matter how often you check.

You may be asking yourself, what’s a few points here or there?

Here’s a recent article I wrote about why your credit score matters. Don’t take your score for granted. A mistake on your report could cost you the opportunity to purchase your dream house, or it could result in your interest rates being raised on your credit cards or car loans.

strongly encourage you to know exactly what your credit score is and to check it often.

2) A Favorable Divorce Decree Clears You of Debt

No, it doesn’t. Here’s the scenario: You get a divorce, and as part of the agreement, your ex-spouse takes on some of the mutual debt, say, a credit card with a large balance.

So long as your ex-spouse pays the payments on time, there shouldn’t be a problem.

But if you are listed as the borrower or co-borrower on the loan agreement, it doesn’t matter what the divorce decree says, it will not relieve you from the obligation of jointly held debts.

Simply, if your ex-spouse neglects to make the payments, or pays late, your credit score will suffer and the credit card (or mortgage, automobile or cable) company will likely come after you for the money.

3) Carrying a Balance on Your Cards is Good for Your Score

No, it isn’t. 30% of your credit score is based on something called “utilization.” That means the percentage of the available credit that you use determines 30% of your overall credit score.

Keeping your utilization below 30% (that’s a guideline, not a rule) should (based on other factors) help keep your credit score healthy.

But here’s something to consider: The credit giant Experian reports that the top 1% of consumer credit scores use 8% or less of their available credit lines.

My advice is to use your cards sparingly, and pay them off each month. But if you have to carry a balance, keep it in check, or you risk damaging your score.


These are just three common credit and debt myths of the many hundreds that are out there. Dings or mistakes on your report can take a long time to clear and can cost you money.

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