In American kitchens, group chats, and TikTok comment sections, there’s a persistent notion that just won’t go away. It states that maintaining a small monthly balance on your credit card is necessary to raise your credit score. It is said that if you pay it to zero, the bureaus won’t find anything worthwhile. It’s the kind of folklore that spreads like a rumor that no one bothers to verify after it’s passed from a parent to a freshman in college opening their first card. The problem is that it’s incorrect. And for years, it has been incorrect.
Approximately 65% of Americans still think that having a balance improves their score, according to a Lending Tree survey; among Gen Z, this percentage rises to 79%. Tens of millions of people are paying interest on purchases they could have paid for in full, believing they are acting responsibly. When you sit with that number for a moment, it’s difficult to ignore what it actually means. The concept is widespread, as the company’s chief credit analyst, Matt Schulz, has described it. It appears everywhere, including in local newspaper advice columns, personal finance forums, and the casual conversation of someone who was recently turned down for a refinance and isn’t quite sure why.
| Detail | Information |
|---|---|
| Topic | The persistent credit score myth costing American consumers money |
| Reported share of Americans who believe the myth | 65% according to a Lending Tree survey |
| Generation most affected | Generation Z, with 79% holding the belief |
| Primary expert cited | Matt Schulz, Chief Credit Analyst, Lending Tree |
| Credit score range | 300 to 850 |
| Considered a “good” score | 670 or higher |
| Considered a “poor” score | Around 600 or below |
| Major scoring systems | FICO and VantageScore (multiple versions of each) |
| Recent regulatory shift | HUD and FHFA accepting VantageScore 4.0 and FICO Score 10T |
| Origin of the change | 2018 Credit Score Competition Act |
| Year FICO scoring was introduced | 1989 |
| Why the myth persists | Confusion between active card use and carrying a balance |
| Real consequence of carrying a balance | Higher utilization ratio, interest costs, lower score |
| Share of Americans with scores above 800 | About 21% |
Even though credit card marketing occasionally gives the impression that the mechanics are difficult, they are not. Credit utilization, or the percentage of available credit that an individual is using at the time a lender pulls the report, is important to scoring models. That ratio increases when a balance is carried. It stays low when you pay in full. Allowing interest to accrue does not come with a secret bonus. Naturally, banks don’t exactly offer this information at the bottom of a statement.
Customers will still ask if they should leave “just a little” on the card if you walk into any branch on a weekday afternoon—the kind with stale coffee and a lone greeter by the door. The myth has warmth and texture, almost like counsel from an experienced person. It most likely survives because of this. Even when the wisdom is incorrect, cold spreadsheets are rarely superior to warm wisdom.
Additionally, there’s a feeling that the timing of everything is more important than usual. With the FHFA accepting VantageScore 4.0 and FICO 10T for federally backed loans, the mortgage industry is finally overcoming thirty years of FICO dominance. Utility bills, rent, and other signals that were previously undetectable will now be taken into account. That’s a significant door opening for those who have done everything correctly aside from owning a credit card. However, the new models are also said to be more rigorous in some areas, which implies that little habits, such as padding a balance for no apparent reason, may matter more rather than less.
It’s still unclear if consumers will notice a change in their actual rates or how quickly lender behavior will change. It’s more obvious that the old myth continues to steal money from those who can least afford it. When a few extra dollars in interest are multiplied nationwide, the result is in the billions. It’s not the myth’s existence that’s strange to watch this play out. It’s the length of time it has persisted without anyone in the business appearing especially inclined to bury it.
