No, keeping a balance on your credit card won’t help you improve your credit score or raise your credit score.

That’s a common misconception held by nearly a quarter of all credit card holders, who believe carrying a balance will help improve their credit scores, according to a new study by Creditcards.com.

That misunderstanding is even greater for millennials, nearly a third of whom believe carrying a balance improve their credit.

Listen up, it’s simple: It’s usually better to pay off your credit card balances as quickly as you can.

Not only will that improve your credit score, it will save you money. Credit cards typically charge a high rate of interest, on average about 16.71%. That amount is added as a percentage of your outstanding balance every month you’re not paid off.

What’s a balance?

A balance is any unpaid amount on your credit card, that carries over from one month to the next.

The average U.S. consumer carries a balance of $6,354 on credit cards.

What’s a credit score?

A credit score is a point-based score developed by a company called Fair, Isaac Co. It’s sometimes referred to as a FICO score. It uses credit history data compiled by credit bureaus Experian, Transunion, and Equifax. Your credit usage information is regularly transmitted to these three agencies.

A credit score can range from 300 to 850. The better your credit, the higher your score. Perfect credit is 850.

How is my credit score determined?

Your credit score is determined based on your use of credit.

The most important factor is how well you handle credit, which chiefly means how timely your payments are. If you are late with payments or have stopped paying a loan, that’s going to have a negative impact on your credit.

If you fail to make a payment within 60 days of your bill due date, that will be reported to a credit bureau, which will hurt your credit rating, according to the report.

The other key thing that determines credit score is something called credit utilization. That’s essentially the percentage of the entire amount of credit that you have available to you,  that you’re using at any given time.

Say you have credit lines worth $10,000, if you’re close to maxing out your lines, that’s likely to have a negative impact on your credit.

What else influences my credit score?

Another thing that influences your credit score is the variety of loans you have.

Generally speaking, the more kinds of credit you can handle well, the higher your score is going to be. For example, if you’re managing to make timely payments on two credit cards, a car loan, and a mortgage simultaneously, your score is likely to be better than someone with just credit card loans.

Other things that influence your credit score include the length of time you’ve had credit, and whether you’ve applied for new lines of credit. The more frequently you apply for credit, the more that will affect your score.

Why does good credit matter?

Your credit score determines the rate you’ll get on everything from credit cards to car loans and mortgages. The higher your rate, the more you’ll pay, particularly for installment loans like cars and mortgages.

Women more likely to make late payments

It turns out that women may be more likely to make late payments on their credit cards than men.

The top reason, according to the survey, might be economic. Women earn nearly 20% less than men, according to data from Pew Research.

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