10 Myths About Credit Scores You Should Stop Believing

Myth 3: Closing Old Accounts Improves Your Score

It might seem logical that closing an old, unused account will help tidy up your credit profile, but in reality, it can actually harm your score. When you close an account, your total available credit decreases, which raises your utilization ratio (the percentage of credit you’re using compared to your limit). A higher utilization ratio can drag your score down.

Additionally, the length of your credit history makes up about 15% of your FICO score. Closing old accounts shortens your average account age, which may reduce your score. Instead of closing them, consider keeping older accounts open, even if you don’t use them often.

Unless there’s a specific reason to close an account—such as high fees—it’s usually better to leave it open and keep the positive history working in your favor.

Myth 4: All Debt Is Bad for Your Credit

It’s easy to assume that all debt is harmful, but that’s not the case. Lenders like to see that you can manage different types of credit responsibly. Having a mix of revolving accounts (like credit cards) and installment loans (like mortgages, student loans, or car loans) can actually improve your score.

The key factor is how you handle debt. High balances, missed payments, and maxed-out cards hurt your score. But making steady payments on a car loan while keeping credit card balances low shows responsibility. This positive activity adds to your credit history and demonstrates financial reliability.

In short, debt itself isn’t bad—it’s how you manage it that matters most.