If you are in the process of establishing or rebuilding your credit, you have probably received plenty of advice from friends, family members, or even by searching the internet. Unfortunately, many popular beliefs about improving your credit score are incorrect. The following are a few of the most  common credit myths .

Myth #1: It is okay if I go over my credit limit.

Just because the card issuer authorized the transaction, it does not mean that there are no consequences. The credit card company reports the percentage of credit that you have used compared to the total credit line. Using a low percentage of your available credit demonstrates a pattern of responsible spending. Using a high percentage sends up a red flag that you have difficulty managing your finances.

Myth #2: Paying off my card will increase my credit score.

While paying on time is important, it will not necessarily increase your credit score. If your credit card is at or near the max credit limit, you will see the greatest impact on your score as the balance-to-credit limit ratio, also known as the utilization rate, decreases.

Myth #3: All credit cards affect my credit score equally.

American Express and cards issued by national financial institutions carry more weight in terms of your credit score. Sub-prime, gas, and store cards carry less weight.

Myth #4: I can increase my credit score by paying off an account that was in collection or charged off.

It may sound counterintuitive, but paying off old debt may lower your credit score. Derogatory items normally report on your credit for seven years. The older the account gets, the less effect it has on your score. A payment is considered recent activity, which means that the creditor can start reporting the account to the credit bureau again.

Myth #5: I can build credit by using my debit card.

Debit cards are tied to your bank account and are not considered a line of credit. Since they are essentially no different than writing a check or using cash, debit cards are not reported to the credit bureaus.

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