Myth No. 6: Paying off debt is bad for your scores.

Fact: Paying your credit cards down is great for your scores, since you're expanding the gap between the credit you're using and the amount of credit you have available. Paying down installment loans also has a positive effect, although it's not as dramatic as paying down lines of credit.

Score savvy tip: The less of your credit card limits you use, the better, but there's no "bright line" demarcating good from bad. Using 30% or less of your limits is good, 20% or less is better, 10% or less is often best.

Myth No. 7: Overdue medical bills won't hurt my scores.

Fact: A collection is a collection, at least in the eyes of the FICO formula. If a medical bill somehow slips through the cracks and is turned over to an agency, your scores could plunge.

Score savvy tip: Keep track of all medical charges, and follow up if your insurance hasn't paid a provider. There's no requirement that you be notified before a medical account is turned over to collections.

Myth No. 8: Closed accounts will disappear from credit reports.

Fact: Negative marks on closed accounts, like late payments or charge offs, can linger for seven years, while neutral or positive accounts can be reported indefinitely.

Score savvy tip: Don't fall for credit repair firms' promises that they can erase true negative information. It's a scam.

Myth No. 9: Checking your credit hurts your credit.

Image: Liz Weston

Liz Weston

Fact: This moldy old myth refuses to die, even though we've known better for more than a decade. Ordering your credit reports from the federally mandated site, www.annualcreditreport.com, or getting your credit scores from any legitimate site, has no effect on your scores.

Score savvy tip: Take advantage of your free annual right to see your credit reports, since many contain errors that should be fixed.

Myth No. 10: You don't need credit scores to get a loan.

Fact: As the economy improves, more lenders may decide to take the risk to extend credit to people with thin or troubled credit files. Currently, though, decent credit scores are required to get a loan from any mainstream lender. If you do get a loan with "manual underwriting," you're likely to pay a higher interest rate for it.

Score savvy tip: Member-owned credit unions often have more flexible credit standards when evaluating applicants. They also tend to charge lower rates on many loans for those with good credit, so they're a good place to check first whatever your scores.

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Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.

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