Photo of Eric R. Ebbert, CFP®, MBA, CEO Eric R. Ebbert, CFP®, MBA, CEO May 06, 2021

Credit often seems like this mysterious entity that some people easily have, and others have to struggle to come by. In truth, building credit is boiled down to how well you manage your debt against your credit limits. However, many people are misled by money myths about credit that can lead them to making costly mistakes.

Take a look below for five money myths about credit you need to stop believing now.

1. You only need a good credit score if you want a loan

While you do need reliable credit to be eligible for loans, your credit score affects much more than that. You need a good credit for:

  • Improved insurance premiums
  • Lower interest rates
  • Rental approval
  • Security clearances

2. The best way to improve your score is to not exceed your credit limit

Staying below your credit card limit is a good way to avoid a low score. However, not only do you need to avoid exceeding your credit limit, but you also need to keep your debt utilization low. 

Your debt utilization rate is the amount you borrow in relation to your borrow limit. A high debt utilization rate can mark you as a high-risk borrower, which lowers your credit score. You should shoot to borrow at a rate of at least 30% less than your limit to keep your debt utilization low.

3. Your credit scores merge when you get married

When you get married, your credit history remains separate. The only time you share credit history with your spouse is if you open a joint account together or authorize your spouse on your existing account.

In the event of a divorce, keep in mind that both individuals are liable for the joint account, its payments and any debt it incurs.

4. Checking your credit report is bad for your score

Nope! You are entitled to a free credit report annually from the three major credit rating bureaus. You can easily access this information at

5. Closing a credit card improves your score

Closing cards can actually make it difficult to improve your score. When you close a card, you decrease your available credit, which increases your debt utilization ratio. This is a problem because it makes it look like you are borrowing at a higher debt utilization percentage.

Additionally, when you close a card, it reduces the average age of your accounts. This can make it look like you are a newer borrower and lower your score.

However, sometimes it is necessary to close a card. Perhaps it is one you are no longer using and do not want to pay for anymore, or maybe you need to protect yourself from fraud. Just remember that when you do decide to close a card, you may need to adjust your spending and pay down your balances to keep your debt utilization low.

The easiest ways to improve your credit score is to spend less than you make and pay off those credit cards monthly.

Talk to a ProVise CFP® professional about managing your credit and debts

At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about your personal financial planning? Contact ProVise today to schedule a complimentary consultation.