More than a third of U.S. adults (37 percent) incorrectly believe that carrying a balance on their credit cards each month will improve their credit score, Capital One reports. The younger you are, the more likely you are to fall for this mistruth. The majority of Gen Zers (53 percent) and nearly half of millennials (48 percent) hold this incorrect assumption.

Credit card debt is particularly pricey these days. The average credit card rate is a record-high 20.22 percent. Nearly half of credit cardholders (46 percent) carry balances from month to month, up from 39 percent a year ago, according to a recent Bankrate survey. It’s one thing if you need to take on debt just to make ends meet — and with inflation remaining stubbornly high, we are seeing a troubling trend of more people financing everyday essentials such as groceries and gas — but paying interest in a misguided effort to improve your credit score is a definite no-no.

The best way to use a credit card is to pay in full every month. That’s crucial for avoiding credit cards’ high interest rates. As long as you’re not paying interest, credit cards offer tons of advantages such as rewards programs and buyer protections ranging from dispute resolution to extended warranties, purchase protection and more.

How your credit score is calculated

From a credit scoring perspective, the top consideration is your payment history. Paying on time, every time, is the way to go. The next biggest factor in your FICO Score is how much you owe. Your credit utilization ratio is a significant part of this category. That’s credit you’re using divided by credit available to you, particularly on credit cards. It’s typically reported on your statement date, so even if you’re able to pay in full and avoid interest, it can be advantageous to make an extra mid-month payment or request a higher credit limit to keep this ratio as low as possible. FICO says many of the people with the best credit scores keep it below 10 percent, but whatever it is now, your credit score should benefit if you bring it down.

Other notable factors include the length of your credit history, how much credit you’ve applied for recently and your mix of credit accounts. Ideally, lenders want to see a long, diverse account history without too many recent applications. But again, it’s worth emphasizing that carrying a balance will not improve your credit score. It will just cost you money in interest charges.

More myths

The Capital One survey also revealed some confusion regarding what happens when you check your own credit scores and reports. More than a quarter of respondents (27 percent) wrongly think checking their own credit will lower their credit score, and another 19 percent are unsure. When you check your own credit history, it does not affect your score. It’s advantageous to do this at least a few times a year to know where you stand and to uncover potential errors. and are helpful, free resources.

Capital One threw in a couple of trick questions, too. The organization found that 70 percent of Americans incorrectly believe that having a low credit score will prevent them from qualifying for any type of credit card. I’m calling this a trick question because a low credit score can definitely prevent you from qualifying for a lot of credit cards, but bad credit doesn’t necessarily mean that every door is closed. You could likely qualify for a secured card, for example, which could help you rebuild your credit score if you use it responsibly.

On a related note, 68 percent of Americans say that paying their utility bills on time improves their credit scores. Capital One calls this another myth, but I’d put it more in the trick question camp. While utility payments are not typically reported via traditional credit scoring methods, there are some ways to include these accounts. You could sign up for alternative credit monitoring tools such as eCredable Lift and Experian Boost to bring utilities and some other payments into your credit reports (such as streaming services and rent, in certain cases).

This won’t help you with every lender, but it’s a useful option to investigate if you’re looking for easy ways to build or rebuild your credit score. In the years to come, I think we’ll see even more “alternative” credit scoring products becoming mainstream, including buy now, pay later plans.

The bottom line

Credit scores can be confusing. They’re extremely important, though. Your credit score is a key factor in whether or not you’re approved for loans and lines of credit, along with the interest rates you’ll pay. Landlords, cellphone providers and utility companies also commonly check applicants’ credit scores. Building and maintaining a strong credit score will serve you well in many ways. Understanding how credit scores are calculated — and avoiding these pesky myths — is a good place to begin.

Have a question about credit cards? E-mail me at and I’d be happy to help.