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Most people think they’ve cracked the credit score game with autopay. With every monthly balance getting cleared automatically, you can glide your way to a high score, right? Not really.

Credit scoring is a little more nuanced than that.

On-time payments and payment history are important, but they are not the full story. At least seven other factors impact your FICO score, according to Experian (1), with amounts owed accounting for 30%, length of credit history accounting for 15% and credit mix for another 10%.

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Simply put, a flawless track record of payments can sit alongside a dropping credit score if you don’t manage the other factors. This nuanced structure of the credit scoring system has also created some persistent myths that you need to understand.

With that in mind, here are three of the biggest myths that can trap even the most responsible borrowers.

Myth 1: Clearing your balance keeps utilization low

Credit utilization is an essential factor in your credit score. It’s a ratio of your credit card balance and available credit, so if you have a balance of $500 and available credit of $1,000, your utilization ratio is 50%.

Generally, lenders prefer a ratio below 30%, according to Equifax (2). So monitoring this ratio and keeping it low is critical if you’re trying to maximize your score.

Here’s the trap: Your card issuer reports your balance to the bureaus on your statement closing date, not your payment due date, as per Experian (3). That means even if you pay your bill in full every month, the balance reported could be hundreds or thousands of dollars if you’ve been spending normally throughout the billing cycle.

You can tackle this by raising your credit limit or paying off your balances early.

Myth 2: Hard inquiries are only for new credit cards

Most borrowers already know they can’t get a new credit card without a so-called “hard inquiry” on their file. These credit checks account for roughly 10% of your credit score, according to Experian.

What many borrowers probably don’t know is that hard inquiries also get triggered by applying for a car loan, taking out a personal loan and even some cell phone plans, according to TransUnion (4).

Now, that doesn’t mean you should avoid all credit. In fact, opening new and different accounts expands your credit mix, which is another key component of your score. Also, some borrowing moves can actually save you money.

For instance, consolidating your various credit cards with one personal loan via Credible could help make your debt burden more manageable. Instead of juggling multiple monthly payments, you’ll have one predictable payment to manage each month.

Through Credible’s online marketplace, finding the right loan becomes much simpler. Credible lets you comparison-shop for the lowest interest rates with just a few clicks.

A lower interest rate could be worth the price of a temporary ding on your credit score.

Read More: Robert Kiyosaki warned of a ‘Greater Depression’ — with millions of Americans going poor. Was he right?

Myth 3: Closing an old account cleans up your score

It feels intuitive to shut an old, dormant credit account. In reality, this seemingly “savvy” move can backfire.

Closing off a very old card drops it off your credit history, which is responsible for roughly 15% of your overall credit score. With this in mind, keeping your oldest credit cards open and active could actually work in your favor and help you boost your score over time.

Bottom line: Paying off your balance on time is important but not the full story. If you’re trying to win the credit score game, you need to know all the rules — even the ones that seem counterintuitive.

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Article Sources

We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.

Experian (1),(3); Equifax (2); TransUnion (4)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.