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[Disclaimer: Reading this post will not automatically improve your credit score—we aren’t miracle workers here. But reading this post will arm you with the knowledge it takes to manage your credit score responsibly. The rest is up to you.]

You may have heard the bad news: Millions of Americans are seeing their credit score sink to new lows. The Associated Press reports that 25.5% of consumers, about 43.4 million, have a credit score of 599 below. These consumers are dubbed “poor credit” borrowers, seen as high-risk borrowers who will find it increasingly difficult to borrow credit.

But it isn’t hopeless for those 43.4 million consumers– or you—to build a great credit score.

Oftentimes, many consumers find it difficult to improve their credit because they don’t quite know how credit scores work in the first place. Just browse the Credit Advice Center and see the scores of people confused about this or that about credit scores.

Knowing the basics puts you closer to building healthy credit and keep you out of that poor credit statistic. Here are my top picks of need-to-know credit score myths and facts, written by Kenneth Lin, our very own Credit Karma CEO (check out the full article here).

1. FACT: Having a variety of debt impacts your credit score. Auto loans, credit cards, mortgages, and student loans all impact your credit score. In fact, the more variety of debt, the more responsible you appear to lenders (so long as you’re responsible with this debt).
2. MYTH: Paying off credit card debt will boost my credit score 50 points. Not necessarily. Depending on how much credit card debt you have, you may see your credit score increase if you pay it off. However, credit card utilization, how much of your available credit you are using, is the more important component of your credit score. Those with the highest credit scores have about 10% utilization.
3. FACT: If you don’t use your credit cards, you aren’t helping your credit score. In order to have a good credit score, you must have available credit that you use responsibly. If you don’t have or use credit, you may have no credit history at all. If you do have credit, your credit score benefits the most from consistently demonstrating responsible use of credit over time.
4. MYTH: Checking my credit score will lower my credit score. When you check your credit score at sites such as Credit Karma, it’s a soft inquiry that doesn’t lower your credit score at all. Only hard inquiries by lenders when they are making a decision of whether or not to grant you credit can lower your credit score.
5. FACT: Even if a bill or debt isn’t generally reported to the credit bureaus, missing a payment will affect your credit score. Any time you pay a bill late or don’t pay at all, that activity can be reported to the credit bureaus. Different companies have different policies about reporting late payments, but never assume that just because you’ve never seen a particular bill listed on your credit report that it can’t negatively impact your credit score if you don’t pay it.

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