A financial services company laid out some of the myths consumers face when dealing with their credit score. Veuer’s Nick Cardona has the story.

Carrying a balance to help improve your credit score? You’re not alone.

But you might want to rethink the strategy.

More than 1-in-5 credit card users, or 43 million Americans, carry a balance – or pay the minimum to credit card companies, thus always owing them money – to help improve their credit scores, according to a new report from But carrying a balance is not one of the factors that go into creating a FICO credit score.

Payment history, amounts owed, length of credit history, credit mix and new credit are the only facets rating companies consider when determining credit scores. And though many experts have previously reported this,’s senior industry analyst Matt Schultz says that the “myth” of the utility of carrying a balance still persists.

“This myth has been out there for a long time, and lots of people have debunked it,” Schultz said. “But it definitely seems like it’s one of the cockroaches of personal finance myths. It can’t seem to be killed.”

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A recent survey showed that more people would be embarrassed to admit their credit scores less than their weight.

Younger users are more likely to carry a balance, according to the report, with 28% of millennials perpetuating the myth. Though Schultz said that living through the 2008 Great Recession has made millennials “financially cautious,” he does not believe that has made them more financially educated than other age groups.

Millennials are most likely to carry a balance due to a “function of inexperience and lack of financial education over the course of their lives,” Schultz said.

The study also found that 27% of cardholders without a college degree have done this, versus 12% with a college education. And 30% of credit card users making less than $50,000 per year have wrongly sought to improve their credit scores by carrying a balance, compared to 19% of those earning more than $50K.

Rather than carrying a balance, credit card holders should focus on paying down their debt and lowering their credit utilization, says David Rae, a Los Angeles-based certified financial planner.

“If you’re looking to raise your credit score, ask your credit card company to increase your credit limit … your credit utilization is a big part of your credit score,” Rae said. “If you raise it, you’re only utilizing a small amount of your credit.”

About 42% of those surveyed confessed to paying a credit card bill late. From that group, 71% said they paid late because they either forgot, were busy and/or were traveling.

Paying the bill one or two days late won’t hurt Americans’ credit scores, according to Schultz. However, being significantly late will.

“If you’re significantly late, it can really, really damage your credit score,” Schultz said.

However, with the advent of online banking, Rae said people have no reason not to pay credit card bills on time.

“Now that you can do it online,” Rae said, “there’s no excuse.”

Follow USA TODAY intern Ben Tobin on Twitter: @TobinBen


It’s going to get more expensive to open up a new credit card.

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