Some common credit score myths can end up costing you money if you believe them.

For example, carrying a balance on your credit card from month to month will not help your credit score. All it will do is cost you money in the form of interest. Instead, you should try to pay off your credit card in full each month.

Another myth is that closing unused credit cards will improve your credit score. Closing an account can hurt your score because it lowers your available credit. It’s best to keep unused cards open and use them sparingly to keep your utilization rate low.

For example, if you have a total credit limit of $5,000, spend $2,000 on your credit card and pay $1,500 of that expense, before your credit card statement is generated. Your statement will only reflect $500, therefore your utilization rate will be considered 10% and not 40%.

It’s best to pay off your credit card balance in full each month.

If you are trying to establish a strong payment history, we recommend the following:

You can make small purchases on the credit card each month, paying the balance in full and making sure all payments are made on time.

If you can’t pay the balance in full, keep it as low as possible.

As a general rule, you should never have a balance greater than 30% of your credit limit on a single card or in total. The lower your balances, the better for your credit score. This is because credit utilization is one of the key factors that lenders take into account when evaluating your creditworthiness. By keeping your balances low, you’ll be showing lenders that you’re a responsible borrower who doesn’t max out your credit cards.