8 Things That Do NOT Hurt Your Credit Score

It seems that credit scores are surrounded by even more mythology than, I dunno, juice cleanses. And we millennials, the ever-flexible and ever-resourceful generation, are perpetuating some of the very worst credit myths out there.

A lot of them are based on the belief that "we don't really need credit." I mean, how many of us are buying houses and cars anyway? If you're planning to rent and Lyft for the rest of your life, why bother putting time, effort, and money into caring what the hell your credit score is? Aren't all these things just hallmarks of "settling down," staying put, and giving up on our free-wheeling dreams?

Not quite. "None of us know what’s coming in the future," explains credit and banking expert Sean McQuay of Nerdwallet. "Even if you don't want a house or car — even with that unattached approach to life, you need good credit to start a small business. Landlords check your credit; your future employers will check your credit." If you're forging ahead into your future with a terrible credit score, you might be surprised when it finally catches up with you.

Another myth, McQuay explains, is that millennials have bad credit because we’re bad with finances. Nope: We’re just young. "It takes a long time to build up your credit score," McQuay explains. "It’s not a measure of how good you are with your own money; it’s how good you are with someone else's (the bank's) money. If I gave you $100 and you gave it back immediately, that doesn't show me you’re trustworthy. If you hang onto it and give it back a year later, that's another story."

Plus, it's more tough than ever for millennials to start building credit early. Why? Well, if you were in college with us old folks prior to 2009, you were likely bombarded by credit card companies on campus, urging you to open a card. The Credit Card Act of 2009 made that illegal. Now, plenty of young people are making it through college and even through their 20s without ever opening a credit card.

"If teens have learned anything about finances, it’s that credit card debt is bad," says McQuay. "They’re not getting the full story."

So what is the full story? Well, first of all, you should open a credit card, use it, build your credit, and never use a debit card again. Second of all, don't believe everything you hear about what's good for your credit score and what isn't. To help you tell the myths from the facts, we worked with McQuay to round up eight things people think will hurt their score — but are actually good for it.
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Illustrated by Louisa Cannell.
“I can’t get another credit card — I already have three.”

Not only can you get another credit card, you should. Many people are under the (wrong) impression that they'll tank their credit with "too many" cards.

"I have 20 credit cards and a 790 (essentially perfect) credit score," McQuay says. "It’s not related. It's true that when you open up a new credit card, you've decreased your total average credit history — since you don’t have history with that particular card yet. But that's not a big deal, and on the up side, you’ve just increased your credit line. That’s a very strong signal that banks are trusting you more. That measure is the largest."

So go ahead and open another card — provided you're responsible with your spending and won't take an extra card as a sign to do some extra shopping. Plus...
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Illustrated by Louisa Cannell.
"I should steer clear of store credit cards."

It's totally okay if that new credit card comes from a store where you shop often. This way, you'll be building your credit and reaping discount rewards.

People often think, Stores are trying to trick me into signing up for their credit cards, and those are worse for my credit score. In reality, store credit cards are no different than a normal credit card. "They show up the same on the report," McQuay explains. "The financial product is exactly the same; it just has a store logo on the front. In fact, I recommend that consumers do carry a couple store cards."
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Illustrated by Louisa Cannell.
"I need to carry a balance on my card in order to build credit."

Nope. Totally false. You should absolutely aim to carry zero balance — that is, pay off your credit card debt in full every month. Yet somehow, the idea that you need to carry debt is a very pervasive myth. "This misconception is not only misleading; it’s damaging," says McQuay. And it's a very expensive mistake to make, since it means you're paying more interest in the long run. "You do need to use your cards to build credit, so it doesn’t stop building," adds McQuay. "So your best bet is to use it, pay it off, use it, pay it off."
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Illustrated by Louisa Cannell.
"Parents shouldn't add a kid as an authorized card user — it's too risky."

Totally untrue. In fact, a teen who is an authorized user on their parents' card(s) is working wonders for their own credit score.

Yes, it's likely too late for your parents to add you to their cards at this point. But if they did happen to add you back in the day, congrats! You've been building credit for way longer than you may have thought.

"For example," McQuay says, "my sister is 19. She has an excellent credit score at such a young age, without having spent any time building her credit through her own credit cards. But, because my parents added her as an authorized user on their card throughout her teen years, she's been building credit since she was 12. In fact, her oldest account is 23 years old — it's been around longer than she has!"

In addition to helping build kids' credit, adding your child to your cards can be a way to begin teaching them financial hygiene from a very young age. "If parents are really concerned about the kid using the card responsibly," McQuay adds, "they don’t actually need to give the physical card to the kid. You can add that kid as a user and keep the card in the sock drawer — it's still building credit."
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Illustrated by Louisa Cannell.
“I don't make enough money to have good credit."

Having a low income does not hurt your credit. It's all about how you use your money (or rather, the bank's money) — not how much money you make. Are you putting off building your credit until some imagined future in which you make double your current salary? Don't.

"Your credit score does not care how much money you make," McQuay insists. "Sure, if you're applying for a mortgage, the bank cares about your income, because they want to know that you can make the payments. But the concept of having a certain job or salary tells credit card companies nothing about how trustworthy you are."
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Illustrated by Louisa Cannell.
“I should always decline offers to increase my credit limit."

Actually, increasing your credit limit is a really easy way to help your credit score. "It signals that the bank trusts you more," McQuay explains. "The higher your credit limit, the higher your credit score. They’re looking at your credit utilization, specifically: Of all the money you have available, how much do you spend? Anything above 60% is really bad. Anything below 30% is healthy."

So if you spend $2K of a $3K credit limit, that's a very different (and much worse) move than spending $2K when your limit is $10K. It's the ratio that matters most. That said, if you know you're going to see a shiny new $10K credit limit as an excuse to actually spend $10K, obviously don't make the increase.
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Illustrated by Louisa Cannell.
“Closing this barely-used old card will help my credit."

Do you have an old credit card lying around, maybe from a college account or a bank that's no longer convenient for you to get to? Are you in the midst of some major Kondo-ing and getting rid of every card that doesn't bring you joy? Stop right there: Losing a card hurts your credit. This is especially true for old cards.

"When you close an old card, you’re removing that card's entire average history," McQuay explains. "Now its average history is zero, which brings down your total credit history average." So keep it open, if you can.

"You do need to use cards periodically to make sure they're not closed due to inactivity," McQuay advises. "I suggest using an old card every 12-18 months. It doesn't have to be a big purchase; buy groceries. As long as it’s easy to pay your bills over the internet, and you’re not paying an annual fee, keep the card open — for the sake of your credit."
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Illustrated by Louisa Cannell.
“Rebuilding an awful credit score is impossible."

Never say impossible! Of course bad credit is, well, bad for your credit. But that doesn't mean it's forever. You can rebuild your credit, even if things are looking pretty grim these days.

"If you have bad credit, it's that catch-22 thing where in order to build trust, you need to show banks that they can trust you — and why would they trust you in the first place?" McQuay asks. "There are a couple of products to get your foot in the door: student credit cards, and secure credit cards. The latter allows you to deposit money with the bank and borrow from that; essentially, they're lending you your own money. This is pretty expensive, so it's really only for people who have damaged their credit and need to rebuild."

Now that you know what won't hurt your credit score, here are some more tips for how to make that score shine. We'll see you at 750, folks.
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