Credit scores and reports can feel a little spooky sometimes, with mysterious numbers that seem to change for reasons no one fully understands. Add to that the flood of misinformation floating around, and it’s easy to see why credit myths linger.

So, what’s real and what’s not?

In this Headlines and Fine Print episode, PACU President & CEO Dion Williams breaks down the most common credit report myths and what’s hiding in the fine print.

MYTH: Checking Your Credit Hurts Your Score

False.

There are two kinds of credit inquiries: soft and hard. Soft pulls may be when you’re checking your credit, or even when some lenders specify they are doing a soft pull when pre-qualifying you for a loan, and then they will later do a hard inquiry.

Hard inquiries are when you formally apply for a loan. These kinds of inquiries can lower your credit score.

The fine print: Too many hard inquiries can lower your credit score.

MYTH: Closing Old Accounts Boosts My Score.

The myth isn’t as clear-cut because available credit and utilization are factored into the equation.

The more credit available and the lower the utilization rate, the better your score will be. Closing an old account could potentially work against you.

On the other hand, if the card charges an annual fee or tempts you to overspend, closing it might make sense for your financial well-being, even if your score dips a bit.

MYTH: Carrying a Balance Helps Build Credit.

False.

You don’t need to carry a balance to prove your creditworthiness. In fact, doing so costs you more in interest.

Making on-time payments and keeping your credit utilization under 30% will help your score more than anything.

MYTH: Credit Scores are the Same Across Credit Reporting Bureaus

False.

Each credit bureau uses different credit scoring models depending on the product. If you make on-time payments, keep credit utilization low and minimize your hard credit inquiries, don’t panic over slight score variations. They all tell the same story: you’re managing credit responsibility.

MYTH: Activity Takes Time to Reflect

True.

Suppose you come into a large amount of money and immediately pay your unsecured debt. It may take time for your score to be updated to reflect your actions. Creditors usually report activity once a month, so don’t expect immediate updates.

Patience pays off. Remember that your score reflects your financial history, not instant results. Any balances at zero or low will work in your favor.

MYTH: Always Trust Credit Repair Companies

False.

It is probably not legitimate if a credit repair company promises instant credit fixes. No one can legally remove accurate, negative information from your credit report. You can dispute errors on your own at no charge. Real credit improvement takes time and discipline to pay down balances and establish a history of on-time payments. There is no instantaneous fix.

Bringing the Myths Full Circle

Credit report headlines can sometimes leave out important details when it comes to truly understanding how certain things impact your score and how you can actually work to improve it.

That’s why reading the fine print is always a good idea, especially regarding something that can affect major areas of your life, like credit reports.

Want to learn more about the headlines and fine print of other financial topics? Check out past episodes of Headlines and Fine Print on Spotify and YouTube.