Credit is an important financial factor in modern life, necessary for making large purchases and borrowing money.
What many people don’t realize, though, is that your credit score can also affect things unrelated to loans, like your insurance coverage and rates. That’s why it’s essential to know what impacts your credit history and score (and what doesn’t).
Read this to learn the truth behind four common credit myths.
Myth #1: Carrying a credit card balance will improve your score.
While debt utilization (the percentage of your total available credit in use at any given time) matters, carrying a balance won’t necessarily help your score — and could hurt it. Carrying a balance also means having to pay interest on it, which is why paying off your card’s balance in full each month is best if you can manage it.
Myth #2: Checking your credit history will lower your score.
When you apply for a loan and the lender checks your credit, that’s a hard inquiry, which can affect your score (especially if multiple credit checks happen within a short period). But you can make a soft inquiry to check your own credit report and score without penalty.
Myth #3: Closing a credit account will improve your score.
The age of your credit accounts and your credit utilization ratio are both factors in calculating your score. Closing a credit card, especially a longtime account, can actually hurt your score temporarily. It’s generally better to leave a credit card open and unused than to close it.
Myth #4: You can quickly improve your credit.
Unfortunately, there’s no quick fix for your credit history. Certain events, like bankruptcy or foreclosure, may stay on your credit report for years. Other factors, like high credit utilization, simply take time to improve. But the upside is that you can rebuild your credit over time with sustained effort and good habits.
Get in touch if you have questions about your insurance policy or need to make changes to your coverage.
© 1993–2025. Atlantic Insurance Group Agency, Inc. Website designed and powered by Bizzistance.