Myths about credit can be harmful to finances

Most people know that having a good credit score can benefit them in a number of ways, such as qualifying for home mortgages and obtaining good interest rates on loans and credit cards. Not everyone is aware of what types of financial behaviors help credit scores and what harms a credit score. People striving to improve their credit scores may end up doing themselves a disservice if they believe several popular misconceptions about credit.

Having "too much" credit hurts a consumer

Some people believe that having a lot of available credit will actually make a consumer look less desirable in the eyes of lenders. They reason that people think this is they feel credit agencies will think that if a person uses up all of the available credit at one time, he or she may not be able to make minimum monthly payments. Lending more to this person would seem to be risky.

However, credit scores do not include the amount of credit a person has available in the calculation. A lot of available credit and low or no balances on credit accounts tend to indicate to lenders that a person behaves responsibly with his or her money, since other lenders have given a great deal of credit.

Carrying a credit card balance helps credit score

A common misconception that many people hold is that a person needs to carry balances on their credit accounts to show activity and get lenders to report the activity to credit reporting bureaus. Carrying balances can actually hurt a person's credit score, however. The amount a person owes compared to the amount of available credit a person has is a part of a credit score calculation. The more credit a person has used up, the lower his or her credit score.

Married couples have combined credit scores

Credit scores and credit reports are unique to each individual; those who marry do not combine their credit scores and reports with spouses. People may choose to open joint lines of credit with their spouses, and lenders will report the activity on those accounts to credit reporting bureaus. The activity will impact each spouse's individual credit score and report, so one spouse's payment activity can still affect the other spouse's credit score and report.

Credit repair agencies can improve credit scores

Many people who are struggling financially and worried over their credit scores become desperate to improve their situations. Some turn to credit repair agencies in hopes that these businesses can improve their credit scores. However, these firms cannot do anything for a person's credit score that he or she cannot do alone - and people are uselessly spending money they can ill afford.

If you are struggling to make ends meet and are falling further and further behind, talk to a board-certified bankruptcy attorney who can discuss your situation with you and advise you of the best steps to take.