Most parents want the same thing — to raise financially responsible kids who make smart decisions. But let’s be honest: when it comes to credit, most of us were never taught how it really works.
We grew up hearing half-truths, scary warnings, and confusing advice. “Don’t use credit cards.” “You need to carry a balance to build credit.” “Checking your credit score will hurt it.”
And now, as adults trying to guide our kids, those myths can sneak back in — shaping how we spend, borrow, and teach.
So today, we’re going to clear the air. Let’s separate fact from fiction so your family can use credit with confidence, not fear.
Myth #1: You Should Avoid Credit Cards Altogether
If you’ve ever heard someone say, “Credit cards are evil,” you’re not alone. Many parents think cutting up the plastic is the only way to stay out of debt.
But here’s the truth: credit cards themselves aren’t the enemy. Misuse is.
Credit cards can actually be powerful tools — when used responsibly. They help build your credit history, protect against fraud, and sometimes even offer rewards that can save your family money.
Imagine teaching your teenager how to use a credit card wisely before they leave for college. You could show them how to buy something small — say, gas or a streaming subscription — and pay it off in full every month. That small habit builds confidence and credit.
Avoiding credit altogether might seem safe, but it also means missing out on opportunities to build a solid financial foundation.
Fact: Credit cards don’t create debt — habits do.
🧭 Pro tip: Keep credit utilization (the amount you spend compared to your credit limit) under 30%. That’s one of the biggest factors in maintaining a healthy score.
👉 Learn more from Experian about credit utilization.
Myth #2: Checking Your Credit Score Hurts It
Many people still believe that just looking at their credit score can make it drop. That’s a myth that’s been around for decades — and it’s kept way too many families from paying attention to their credit health.
Here’s the reality: when you check your credit score (through a service like Credit Karma, Experian, or your bank), it’s considered a soft inquiry. Soft inquiries don’t affect your score.
The kind that do are called hard inquiries — these happen when you apply for credit, like a mortgage or car loan. Even then, the impact is small (usually less than five points) and temporary.
So go ahead — check your score regularly. Think of it like stepping on a scale before starting a health journey. You can’t improve what you don’t measure.
Fact: Monitoring your credit score is one of the best things you can do for your financial health.
👉 Here’s how to get your free annual credit report from the FTC.
Myth #3: You Need to Carry a Balance to Build Credit
This one might be the most persistent — and the most expensive.
You’ve probably heard someone say, “Keep a small balance on your credit card to show activity.” It sounds logical, but it’s wrong.
Carrying a balance doesn’t build credit — it builds interest payments.
You build credit by showing that you can use it responsibly — meaning you make purchases and pay them off in full and on time.
If you carry a balance, you’re essentially paying interest for no reason. Over time, that can eat into your family’s budget — money that could’ve gone toward your kids’ savings, a family trip, or your future goals.
Fact: Paying your balance in full every month is the smartest way to build credit and stay debt-free.
Myth #4: Closing Old Accounts Will Improve Your Credit
It might feel satisfying to close that old store card you haven’t used in years. But here’s the catch: doing so could actually hurt your credit score.
Why? Because two key factors in your credit score are length of credit history and total available credit.
When you close an old account, you shorten your credit history and reduce your available credit — both can lower your score.
Instead, keep older accounts open if they don’t have annual fees. Use them occasionally for small purchases, then pay them off. That way, they stay active and continue helping your credit profile.
Fact: Older credit accounts are like fine wine — they get better (for your score) with age.
👉 Learn more about how length of credit history affects your score.
Myth #5: Income Affects Your Credit Score
This one surprises a lot of people. You might assume your income plays a role in your credit score — after all, it affects your ability to pay bills, right?
But credit scores aren’t about how much you earn — they’re about how you manage what you borrow.
You could make $40,000 a year or $400,000 a year and still have a poor credit score if you miss payments or max out your cards. On the flip side, someone with a modest income who pays bills on time and keeps balances low can have excellent credit.
Fact: Credit scores measure behavior, not wealth.
That means your habits — not your paycheck — determine your financial reputation.
👉 Here’s how lenders really use your credit score, according to NerdWallet.
Myth #6: Debit Cards Build Credit
Debit cards are convenient. They help you stick to your budget because you’re spending money you already have. But when it comes to building credit, debit cards don’t count.
That’s because debit card activity doesn’t get reported to credit bureaus. Whether you spend responsibly or not, it won’t impact your score.
If your goal is to help your teen start building credit, consider helping them open a secured credit card or becoming an authorized user on one of your accounts.
With guidance, they can start learning how to use credit wisely — with the safety net of your oversight.
Fact: Only credit accounts (not debit) build credit history.
👉 Here’s how secured credit cards work, from Bankrate.
Myth #7: Credit Scores Are Permanent
Your credit score can feel like a permanent label — “bad credit,” “good credit,” “fair credit.” But that label can change faster than you think.
Credit scores are dynamic. They update every month based on your latest activity.
That means if you’ve had late payments or high balances in the past, you’re not stuck. You can rebuild.
Paying bills on time, keeping balances low, and avoiding unnecessary new credit can all help your score climb — sometimes in just a few months.
If you’re rebuilding your family’s credit, make it a team effort. Talk about goals, track your progress, and celebrate milestones.
Fact: Credit is forgiving — it rewards good habits over time.
👉 See tips for rebuilding credit from the Consumer Financial Protection Bureau (CFPB).
Myth #8: Your Credit Score Is the Only Thing That Matters
Your credit score is important — but it’s not the full picture.
Lenders also look at your income, debt-to-income ratio, employment history, and overall financial stability.
So while it’s important to maintain a healthy score, remember that true financial wellness is broader. It includes saving, budgeting, investing, and having a plan for your family’s future.
Think of your credit score as your financial GPA — it’s one measure of your performance, but not your whole story.
Fact: Credit is just one piece of your family’s financial puzzle.
How to Teach Your Kids the Truth About Credit
Talking to kids about credit can feel like explaining taxes — complex and full of “you’ll understand when you’re older.” But it doesn’t have to be that way.
Here are a few ways to make it real and relatable:
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Use analogies: Credit is like borrowing a toy from a friend — you earn trust by returning it in good shape and on time.
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Share your stories: Tell them about your first credit card or a financial mistake you learned from.
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Show, don’t just tell: If they’re old enough, let them see your credit report and explain what it means.
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Practice with training wheels: Help them open a small starter account or prepaid card to practice managing money.
The earlier they learn, the more confident they’ll be when it’s time to make their own financial choices.
The Bottom Line: Credit Should Empower You, Not Intimidate You
Credit isn’t something to fear — it’s something to understand.
Once you separate myth from truth, you can use credit as a tool to unlock opportunity — lower interest rates, better insurance premiums, and even the ability to rent or buy your dream home.
And more importantly, you can teach your kids that credit is about trust — trust in themselves to make smart decisions and trust in the system when they play by the rules.
So the next time someone says, “Don’t mess with credit,” you’ll know better.
Because credit isn’t a trap. It’s a tool.
And in your family’s hands, it can be a powerful one.