Plenty of well-meaning people are eager to share their wisdom regarding credit, from the best ways to use accounts to how to approach credit reports and scores. You may even ask for it.

According to a recent survey, 37 percent of U.S. adults cited friends and family as their primary resources for this type of counsel. However, while those in your inner circle may have excellent pointers for your personal life, what they say about credit may not be correct. Follow their lead and trouble can ensue.

Here are 10 examples of very bad credit advice doled out by friends and family members – and what the good advice really is.

1. ‘Participate in a credit card scam’

”I was at a party at the end of 2019 and someone was telling a group about their genius idea to buy a bunch of stuff on their credit cards, then go through debt settlement and pay it all off for pennies on the dollar,” says Eric Nisall, tax accountant and founder of Understand Finances. According to this guest, it’s a great way to get ahead.

Better advice: Use your credit card as a good faith payment tool

Never enter into a scheme like this. First of all, it’s illegal to willingly commit debt settlement fraud. This strategy will also likely trigger a tax consequence if more than $600 is forgiven. Plus, the resulting late payments, default, and collection activity will scorch a credit report and lower your scores dramatically.

2. ‘Don’t check your credit reports because it will hurt your credit scores’

Kevin Haney, owner of ASK Benefit Solutions, said his mortgage broker friend gave some alarmingly bad guidance during a speech. “He told the audience not to check their credit reports before buying a home because inquiries would hurt their scores,” Haney says.

Better advice: Check your credit reports because it can help your scores

As a consumer, it is your right and responsibility to review your credit reports and doing so has no impact on your credit scores. By knowing what’s listed you can make better credit decisions to improve your scores, which is especially critical to do before home loan shopping.

3. ‘Dispute everything that’s damaging your credit reports and scores (even if it’s accurate)’

Another friend of Haney’s told him that he should dispute all problematic credit report entries, even if the information is accurate or recent. With this method, people can purge derogatory data that’s appearing. The friend claimed that in return they’d gain an instant credit scoring boost.

Better advice: Dispute inaccurate or old information on a credit report

The rules regarding credit report disputes are clearly spelled out in the Fair Credit Reporting Act: only information that is incorrect, duplicate, or past the permitted time frame may be purged from a consumer’s credit file. Otherwise the dispute is frivolous. To repair credit damage, use credit products responsibly and wait for dings like late payments and collection activity to stop appearing. Any credit repair services promising to remove accurate information from your report are fraudulent.

4. ‘Max out your cards to build credit up’

Sai Blackbyrn, CEO of the Coach Foundation, said his cousin told him to charge his cards up to the limit every month, a strategy that would increase his FICO Score. All that charging would be helpful, assured his cousin, because it shows high usage.

Better advice: Charge constantly and keep the debt low

Charging at least once a month shows regular usage, which is great, but the balance should be paid in full or kept well below the credit limit. Credit utilization is an important credit scoring factor and owing less than 30 percent of what you can charge is ideal. “I really wish someone had smacked me in the head right there and then for not doing research on my own,” says Blackbyrn who followed the advice and ended up in a debt spiral.

5. ‘Avoid credit cards because they’re dangerous’

“The worst piece of financial advice I was ever given was to stay away from credit cards,” says Tawnya Redding, a blogger for Money Saved is Money Earned. This directive came from her grandparents who lived through the Great Depression. This generation also experienced food and product rationing during the Second World War, so they were taught to be extra careful with money.

Better advice: Use credit cards as safe payment tools

There is no reason to avoid credit cards if you make a commitment to using them advantageously. The basics are to charge the amount you can pay in full by the statement’s due date. You won’t be charged any interest, making the loan free. Moreover, you’ll build your credit rating so that you qualify for credit cards that have valuable rewards programs. As long as you don’t carry over any debt, you’ll profit from the process.

6. ‘Just make the minimum payments’

“My sister-in-law once advised me that it’s better to settle just my minimum due to not get pressured on paying the full amount especially in tight months,” says Willie Greer, founder of The Product Analyst. She claimed that as long as you meet that figure, your credit will be fine and you can go about your life without a care.

Better advice: Pay your bill in full whenever you can

It’s important to always make at least the minimum payment, but you’re better off paying your balance in full whenever possible. When you carry a balance from month to month you’ll start accruing interest on your purchases. If you let this go on continuously, you’ll end up paying much more for the things you buy and the debt can become insurmountable.

7. ‘Don’t read your credit card statements’

Daniela Baker, a web development writer, says her sister gave her some very strange advice: you know what you owe so stop caring about your billing statements. If you check them you’ll just get a headache. “She hates seeing billing statements,” says Baker. “She said it’s an annoying reminder that you owe people money. Looking at a pile of billing statements adds to her financial stress.”

Better advice: Always read your credit card statements

There is a lot of essential information on the statement that your credit card issuer sends you at the end of the billing cycle:

  • payments and credits
  • detailed list of purchases since the last statement
  • balance transfers and cash advances
  • added fees and interest charges
  • new balance
  • available credit
  • minimum payment amount
  • due date
  • changes to your account, such as an interest rate hike

Reviewing your statement will ensure that you spot any mistakes and help you properly manage your account. Information, not avoidance, will save you from headaches.

8. ‘Immediately request a chargeback for unwanted items’

Monica Eaton-Cardone, co-founder of Chargebacks911, says she hears friends tell people to contact their credit card company to reverse a charge when they’re unhappy with a purchase. “For instance, if they bought a pair of high heels late at night and regretted buying them when they were delivered, they were told that a chargeback was the best way to get their money back.” These people claim it’s fast and harmless and it makes no difference if the refund comes from the bank or the store. For them, the only important thing is that they receive a full refund.

Better advice: Attempt to resolve the issue with the merchant first

Asking the seller for a refund before taking it up with your credit card issuer is the legally appropriate action, says Eaton-Cardone. You’ll probably get the resolution you want. It also keeps the cost of goods down. “When you file a chargeback, the seller can be hurt in triplicate,” she says. “First, the bank forces the seller to automatically issue a complete refund; second, the seller loses the physical product; and third, they’re hit with additional penalties and banking fees.”

9. ‘Become a credit cosigner’

Tana Williams, founder of Debt Free Forties says the worst credit advice she ever received was from a friend who recommended she cosign on someone else’s loan. According to the friend, it’s a great way to help a person in need who doesn’t have an established, positive credit history.

Better advice: Keep your credit to yourself

Cosigning on a credit product should be done rarely and carefully. “The stress of someone you love potentially leaving you on the hook for paying back the loan wouldn’t be worth it,” Williams says. “Also, if they default on the loan, it will ding your credit. If your credit score drops, it can affect everything from getting hired for a new job to raising the cost of your insurance.” If you want to help out a friend, a monetary gift may be the preferred choice.

10. ‘File for bankruptcy, even if the debt is payable’

Todd Christensen, a financial counselor and educator at Money Fit, says that a college buddy told him to file for bankruptcy and discharge his $2,000 debt in court. With a Chapter 7 bankruptcy he could have this meager debt erased and all would be well. This friend, who was also a finance major, claimed it’s the perfect plan.

Better advice: File for bankruptcy when there are no other options

Bankruptcy should only be pursued when you genuinely do not have enough money to repay your financial obligations. It’s the last resort because it has so many serious ramifications, including being listed on your credit report for ten years. In fact, it’s not available to those who do have the means to satisfy their liabilities. If you’re having trouble overcoming debt, consider reaching out to a credit counseling service.

The bottom line

Of course, some of your friends and relatives can offer excellent credit advice, too, but the best course of action is to confirm with an expert source before moving forward. If they’re right, terrific! But if they’re wrong, you may want to gently update them with the correct information. You’ll be doing someone else who listens to them a favor.