DebtIt’s no surprise there are misconceptions surrounding credit reports and credit scores. It can be easy to have these misunderstandings, whether because of social media, friends and family, or simply your own interpretations.

But believing myths about credit could ultimately damage your credit scores, resulting in lost opportunities and possibly even higher interest rates. But you can do something to help prevent that from happening to you. These are five credit score myths that you just simply can’t afford to believe.

1. Credit Card Debt Is Harmful

Simply having credit card debt does not do direct damage to your credit scores — it’s how you handle that debt that is impactful. For example, if you aren’t paying your statements on time, your credit scores will take a hit. And, if you’re carrying too much credit card debt in relation to your full credit limit — this is known as your credit utilization ratio — your scores can be dinged. Experts typically recommend having a 30% (or less) credit utilization ratio, ideally 10%. (You can check out your credit utilization ratio by viewing two of your credit scores for free, updated every 14 days, on

2. Closing Credit Cards Is Helpful

Paying down credit card debt can be very beneficial for your credit scores — and something you should definitely be proud of. But, once a credit card reaches a zero balance, you’ll want to think twice before closing that account entirely. Doing so can actually hurt your credit scores. This is another result of the credit utilization ratio. By closing your account, you’re actually reducing your available credit and any balances you still have now take up a larger chunk of your available credit limit. It may also impact the age of your credit if you’re closing one of the older cards in your credit profile and the age of your credit makes up roughly 15% of your credit scores.

3. Paying Off a Collections Account Makes It Disappear

Once an account is in collections, it can appear on your credit reports and have an effect on your credit scores for at least seven years. Paying off the debt can make the debt collectors stop calling and can result in the account updating to a paid status, but that doesn’t mean it’s gone away. You’ll still see it on there until the seven years has passed. Once the item has reached the time where it should “age off” your report, it’s a good idea to review copies of your credit reports from the three major credit bureaus — Experian, Equifax and TransUnion — to ensure it’s removed. You can get your free copies once each year by visiting

4. All Credit Reports Contain the Same Information

The three major credit bureaus provide credit reports and credit scores to lenders, creditors and consumers. But the information contained in those credit reports can vary, as the bureaus don’t all communicate with each other, nor does every outlet report to each bureau. It can be beneficial to check all three to know what information is appearing, as well as to review the reports for any errors. If you do find a problem, this guide can tell you how to dispute an error on your credit reports.

5. Co-Signing a Loan Is Not Risky

If you’re considering co-signing a loan to help a friend or loved one, just know this: you can be held accountable for repaying this loan. The loan can appear on your credit reports, along with any missed payments or even collections activity. If the loan becomes delinquent, collections agencies could come after you for the debt. Your credit scores can be directly affected by these co-signed loans. If you’re considering co-signing a loan, you may want to think very hard about the decision and the responsibility of the person for whom you’re co-signing.

This article originally appeared on and was written by Brian Acton.