A good credit score is vital to unlocking several a wide range of financial opportunities. However, believing in credit-building myths can derail your efforts. Avoiding these credit-building myths will help you out in the long run.

Myth #1 – Establishing a bank balance is a great way to build credit

Your assets are not factored into the credit scoring calculations. How much money you have in your bank or in investments has absolutely no impact on your credit. Credit scores take into account how you handle debt. It doesn’t take into account how much you own. For credit building, what’s important is your repayment history, credit utilization, and average age of your credit.

Myth #2 – The more credit cards you have, the faster you build credit

Getting a credit card is a great way to build credit, but the number of cards you own doesn’t matter. Keeping your credit utilization low and paying off your bills on time are what will help boost your score. And one credit card is all you need for this purpose.

Carrying too many credit cards also increases the risk of potentially disrupting your credit-building efforts. Having extra credit can tempt you to overspend. If you can’t pay off the bills on time, the late payments will hurt your score.

Having several credit cards but no other types of credit is also detrimental to credit-building. 10% of the total score is based on the types of credit you have. A more diverse portfolio that includes a credit card and home, student or car loans is better than having only credit cards.

Myth #3 – You can use a debit card to build your credit

Using a debit card or even a prepaid credit card will neither help nor hurt your credit score. Paying cash for purchases won’t help either. Direct transactions are not reported to the credit bureaus so there’s no way for lenders to know your purchasing history. Only your payment history on credit cards and loans is reported to the bureaus. That’s because lenders are only interested in knowing if you’re a responsible borrower.

Myth #4 – Higher paying jobs help build credit faster

No, they don’t. Earning a higher income won’t help your credit-building efforts. How much you earn, save or spend play no role at all in the calculation of credit scores. Credit scoring calculations are based solely on the way you handle debt. That includes how you use your credit cards and how you pay back your loan or mortgage.

The reason this myth came about is that people who earn higher incomes generally have more available funds to pay off their debts. This is what helps boost their scores and strengthen their credit history. It’s not the higher income by itself that matters.

If you have a higher paying job but default on your debt payments too often you will end up with a bad score regardless of your earnings.

Myth #5 – Checking your own credit report can hurt your score

This is a very common myth and one that has prevented many people from checking their credit report. In fact, checking your credit report is very important and it’s something you absolutely should do. Credit reports list your payment history and other relevant financial activities. An inaccurate entry or some fraudulent activity could damage your score. Checking your credit report is the only way to keep tabs on it and make sure it is correct and complete. If you do spot any errors you can file a dispute to get it corrected.

You are entitled to one free credit report once a year from each of the bureaus. Requesting a report for yourself results in what is known as a soft inquiry or a soft pull. Soft inquiries don’t show up on your report or affect your score in any way.

What impacts your credit are hard inquiries. These are triggered when lenders, credit card companies or mortgage dealers access your credit report. You can’t avoid these however. Getting approved for a credit card, loan or mortgage will trigger a hard inquiry, which will pull your score down a few points. The good news is the damage is minimal and temporary.

Myth #6 – Closing credit cards and accounts you don’t use will help

On the contrary, it’s better to keep older credit accounts open to build credit, even if you’re not using them. Keeping older accounts open helps your credit score two important ways.

One: It increases your available credit limit.

Having a higher credit limit lowers your credit utilization ratio. This ratio is based on how much credit you’re using of the total amount of credit available to you. A high ratio means you need the additional funds to cover your expenses, which makes you a high risk borrower.

Credit utilization ratio has the second biggest impact on your credit score, second only to payment history. It accounts for 30% of your total score. The lower your credit utilization ratio, the more points it adds to your score.

Two: It increases the length of your credit history.

Length of credit history is has the third biggest impact on your credit score. It adds 15% to your total score.

Overall, keeping your older accounts open works in favor of credit building. This is because lenders want to see how long you stay with lenders. The reason to close older accounts that you don’t really need is if you’re paying high fees to maintain them.

Myth# 7 – Education level affects your credit score

Demographics, whether age, race, religion or education levels, don’t impact credit scores in any way. Lenders aren’t interested in the degree you’ve earned or where you earned it from. The only thing they are interested in is checking your credit paying history and doing a risk assessment. This helps them determine the likelihood you’ll repay their loan on time.