Credit Score Myths And Tips

1. If I cancel a credit card, will it affect my credit score?

One of the factors determining your credit score is your borrowing power or the sum total of the amount of money lenders are willing to loan (total available credit). An indirect effect of canceling a credit card is that your borrowing power is reduced and that will affect your credit score. If this is your oldest card, that will reduce your credit score as well, since your credit history is an important factor in determining your credit score.


As a rule, if a credit card has an annual fee, and you don’t intend using it, it is better to cancel the card rather than paying a fee every year.

credit score misconceptions and tips

2. If I sign up for a credit card, will that affect my credit score?

When you sign up for any kind of loan (credit cards, mortgage, auto loans), lenders will do what’s called a ‘hard pull’ on your credit report. Frequent hard pulls will affect your credit score.

3. I recently applied for a credit card, but was denied. What affect, if any, will this have on my credit report?

Shopping for credit will cause hard pulls on your credit report and irrespective of whether you are approved or denied credit, the inquiry will be noted on your report.

4. One of my bills went to collections, but I paid the collections amount immediately. Will that affect my credit score?

A collections payment is always bad for your credit score. A collections account stays on your credit report for 7 years!


If a bill goes to collections, don’t pay the collections agency, instead try to negotiate with the company and pay them directly thereby avoiding a ding on your credit score.

5. My credit card company increased the available credit on my credit card without me asking. Will this affect my score?

Yes. But in a good way! With a credit increase, your available credit increases and that decreases your overall utilization (debt to credit ratio) and that will have a positive impact on your score.

6. I have a number of credit cards. I don’t use most of them, but I haven’t closed them either. Is that good or bad?

Having a number of credit cards is actually a good thing, sadly. But lets see why. Having a number of open accounts tells one about your credit worthiness, that more lenders are willing to lend you money. Plus, the sum total of your credit limit increases your borrowing power and reduces your overall utilization both of which have a positive impact on your credit score.


With more accounts, you run the risk of fraudulent purchases and identity theft and this can become a maintenance nightmare. Plus some no-fee card companies are revising their policy to charge annual fees. The best way to keep track of rarely used cards is to use a service like or Quicken Financeworks. These services monitor your cards and can alert you in case of an activity. Sometimes, the cards themselves have an alert service that you can activate. Check with your card provider.

Here’s a bonus tip for monitoring your credit score from all three credit agencies for free (no gimmicks or tricks!)

For more cool tips, consider subscribing to MoneyCone! Cross my heart, I won’t spam! :)

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11 thoughts on “Credit Score Myths And Tips

  1. Credit Score Myths And Tips #RTW

  2. Credit Score Myths And Tips #RTW

  3. Twitter / Matthew Troncone: Credit Score Myths And Tip …: Credit Score Myths And Tips…

  4. Great review of common credit myths. We get our credit report annually from It’s a great way to see if you have a problem with your credit and to track changes year to year.

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