090726 ~ Dispelling Common Credit Myths That Could Be Hurting Your Score - Nicole Bernacik

0:00It's another money Monday from the University of Michigan Credit Union on the Lucian Land show, 1290 WLBY, our topic today, dispelling common credit myths that could be hurting your score. There's no shortage of financial information available today, as we all know, from books and videos to social media, podcasts, friends, family. Advice about money is everywhere. While some of that information can be incredibly helpful, not all of it is accurate and following bad advice can sometimes do a lot of harm. One topic that's especially surrounded by misinformation is credit. Since credit scores play such an important role in our financial lives, understanding what truly helps and hurts your score is essential. Today, I'm talking with Nicole Bernacek, financial education specialist at the University of Michigan Credit Union, and she's going to help dispel common credit myths that could be hurting your score. So, checking your credit reports and scores, I've heard, hurts your score.

1:02True or false? That is a myth. Ah, it's a myth! Okay, so we should be doing more of it. Yes, absolutely. That's a really common one that I hear all the time people think if you check it yourself, it hurts your score. That's not true. So, if you're checking it yourself, no credit impact at all. Only when you apply to borrow money at an outside place, so if you try to take out a credit card or a loan each time you apply, that is going to bring down the score a little bit. So, just be careful anytime they're asking for your sole security number. But that, the inquiries are one of the smallest factors, so it's not going to have a huge hit on the credit. You don't want too many of those in a short period of time just because it makes you look a little bit risky if you're trying to borrow a lot of money in a short period. But you can check your own credit reports and scores multiple times a day, no impact. And so, I recommend there's a few different places. Annualcreditreport.com, you can get the three reports for free. So, aquifax, Experian TransUnion.

2:02You can get them weekly, which is really nice. And then if you want to get the score, experience and credit karma.com. Okay, the first one again, annualcreditreport.com. Experian.com and credit karma.com to get reports and scores for free. You love that. Okay. All right, here's another one for you. You need lots of credit cards open to have a higher credit score. True or false? That is false. But yes. Well, I say false most of the time you don't need them. So, with that, having, it is true that having more available or higher credit limits can be beneficial for your score. But you don't necessarily need, you know, 10, 20 different credit cards open to do that. So, it's more about how you're managing the credit cards that you already have open. So, and sometimes too, I tell people it can be tricky. If you have a lot of credit cards open with balances, just trying to juggle like the different due dates and payments can be a lot to manage. So, I would just say like, you know, try to use your existing credit cards responsibly.

3:07And if you're doing that, and sometimes also if your income increases, creditors might automatically increase your credit limit or sometimes you can even request it. Oh, okay. There was a study that experienced, did tell us about that. Yeah. So, a recent study just this year, August of 2026, and found that people with exceptional credit, so scores of 800 and higher, had an average of 4.6 credit cards. Oh, four to five credit cards open. That's interesting. And what is the highest score one can get? 850. Yeah, 850, but I will say it's very hard to get a completely perfect credit score. But if you can be usually somewhere around like 727, 6, you're higher, usually that's going to qualify you for the best or the lowest rates. Okay. So, true or false, things like debit cards, utilities, and rent help build your credit. So, that is normally false. Oh. Yeah. So, that is another really common myth. People think that it does help, but debit cards, they don't unfortunately get reported to your credit

4:12at all because they're not, they're not borrowing. So, you're, you're using your money for that. That makes sense. But I'm surprised about utilities. Yeah, Lucy, and that's a really common one. So, rent utilities most of the times don't get reported to credit. I have seen a few like situations where I pulled someone's credit and it made, it shows on there, but it's not common. And so, with that, you have to be careful though, because sometimes with utilities are rent if they become severely delinquent and get passed you and sold to a collection agency, they could end up getting reported negatively on the credit. So, there's have to be careful of that. And sometimes, too, there are, like, I've heard of places that will, you can pay to have your rent or utilities reported if you're making on time payments, but generally, I don't recommend paying for something like that, especially if you already have like a credit card or loan that you're paying on time, you'll get credit for that. Okay, good point. The next one, Nicole, you should close credit cards if you're not using them anymore, true or false? So, that is also false.

5:14So, even if you're not using certain credit cards for your score, it is technically better to keep them open. Why is that? Yeah, so, the reason is because there's a few things with the utilization. So, how much you owe on, like, credit cards, lines of credit's compared to the credit limits. When you close those credit cards, you lose that credit limit. So, it makes it a little bit tighter with that sort of ratio they look at. Also, especially if it's an older credit card and you close it, you lose the history. So, it doesn't factor in anymore. And then, the last thing is potentially like your mix of credit, so different types of accounts help your score. And if, let's say, you close your only credit card, then you have less of a variety. Okay. Yeah, I often thought that if you closed it, it would boost you up, but not so. Yeah, a lot of people think that. Yeah, so I will say sometimes, like, if people have a lot of credit cards open, and they just don't want to worry about them, or especially if they have a card charging, like, a annual fee that they don't plan on using again,

6:17sometimes it might be better just to, like, you know, close it, get rid of it. Your score might drop some, but as long as you have other ones that you're using properly, your score should recover. Okay. Yeah, you bring up a good point about there are some that have an annual fee, and you don't want to be paying in that if you're not going to use that card. Yeah, absolutely. Yeah. All right. Our last one today, as we talk with Nicole Bernacek from University of Michigan Credit Union, true or false, you should carry a small balance on your credit cards month to month, the boost your score. This is also false. False. They're all false. Yeah, false. Yeah, okay. Yeah, but this is one that I hear so often, and I'm just like, oh my gosh, I wish we could get this message out to everybody, but you don't have to carry a balance on your credit card to boost it. And it's actually better for your credit score and your wallet to pay credit cards in full pay them to zero every month, because that way you're keeping that utilization, that balance to credit limit ratio low every month, and also you're not paying that high interest rate if you

7:20don't have to. So ideally, though, when it comes to like credit cards and lines of credit, you want to try to, if you can keep the balance or what you've spent on it under 30% of the individual credit limit, and then if you can pay it to zero. Oh, 30% is the rule. Yeah, under 30. All right. Wow. This was a big learning experience today. And as our listeners can see, it's invaluable to talk with an expert like Nicole at University Michigan Credit Union. And UMCU has monthly classes that are absolutely free to the entire community. You don't have to be a member of UMCU. How can they avail themselves of those classes? Yep. Lucy and we do them every month virtually. So it's easy for people to join. If you go to UMCU.org under Learn and then upcoming classes, we always post them like the beginning of each month. And we do them on a variety of topics, but we would love to have people join and they're a lot of fun. Oh, I love it. And I hope everyone takes advantage of that because they are very worthwhile.

8:24Go to UMCU.org and you can find out more when they get online there. What do they look for? Yep. So if you go to UMCU.org Learn and then under like resources, we have, it's upcoming class or events. Okay. You'll see the schedule posted there. So once you get into UMCU.org, just click and learn. Yeah. Get you into the cycle there. Thank you so much. Nicole Bernatek. She is financial education specialist with University of Michigan Credit Union. And each month here on the Lucy and Lance show, Nicole joins us for our money Monday. This is Ann Arbor's talk station, 2012 90 WLBY.