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Bottom Line Up Front

  • Your credit score and credit report are 2 key pieces of information lenders use to determine your creditworthiness.
  • Keeping a balance on your credit card doesn’t help your credit score; making on-time payments does.
  • Closing a credit card with a high interest may help your finances, but it could negatively affect your score.
  • Becoming a co-signer on someone else’s account could harm your score if they miss or make late payments.

Time to Read

3 minutes

March 15, 2022

Your credit score is an important number, but do you know why? For starters, your score is a critical piece of information that lenders often look at to determine if you qualify for a loan or line of credit, and can also affect your rate and term for that loan. Good credit can be important for an apartment or mortgage, or qualifying for a personal or automobile loan.

It’s important to know, though, that there are some falsehoods about credit that can hurt your score rather than help it. Let’s debunk some of those to help you in your quest for a stronger credit score.

Myth: Checking your credit hurts your score.

While it’s true that applying for credit may affect your credit score, you can check your credit score without it being negatively impacted. In fact, knowing your credit score is one way to find out how well you’re managing your credit.

Myth: Keeping a small balance on your credit cards is helpful to your score.

Not only is this usually false, but keeping a balance on your credit cards can also hurt you financially due to the interest rates charged by creditors. In reality, your best bet is to pay your balance in full each month when possible, or at the very least more than the minimum due. And, if you’re carrying a balance, always pay your credit card bill on time.

Myth: Closing a credit card with a high interest rate will enhance your score.

The average age of your credit accounts is an important factor used in calculating your credit score. While it may seem like a good idea to close your higher interest rate cards, it could actually hurt your credit score by lowering your credit age if that card is one of the older cards you hold. Closing a card—regardless of the interest rate—can also raise your credit utilization and hurt your credit score. Instead, consider asking your card issuer to lower your interest rate.

Myth: Opening a new retail card improves your score.

Sometimes a retail card can be beneficial to people trying to build—or rebuild—credit. However, if you’re adding a new card when you already have credit established, the additional line of credit will recalculate the age of your credit score and could make your score dip lower. Remember—retail cards often come with higher interest rates, and paying off your balance plus interest over time may be more difficult. If you’re looking to build credit, opening a secured card from a financial institution such as Navy Federal Credit Union may be a better option.

Myth: Co-signing on a loved one’s credit account won’t affect your credit score.

When you co-sign for a friend or loved one, your credit is tied to the account. If your co-signer misses payments or defaults on a loan that includes your name, it will likely bring down your credit score. Make sure you trust that payments will be made on time each month before you agree to be a co-signer.

Be Wise About Credit

Navy Federal can help you take control of your credit with our Mission: Credit Confidence® Dashboard

Next Steps Next Steps

  1. If you haven’t checked your credit report, be sure to do so. You're entitled to a free credit report every 12 months from the 3 credit reporting bureaus: Equifax®, Experian® and TransUnion®.
  2. If you're new to building credit, check out Mission: Credit Confidence® for resources on understanding and establishing credit. 


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This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.