Your credit score can drop even when you pay in full and on time — and the culprit is a date most people ignore

On-time payments and payment history are important, but they are not the full story. At least four other factors impact your FICO score, according to myFICO, with amounts owed accounting for 30%, length of credit history accounting for 15% and credit mix for another 10%.

Simply put, a flawless track record of payments can sit alongside a dropping credit score if you don’t manage the other factors. This nuanced structure of the credit scoring system has also created some persistent myths that you need to understand.

With that in mind, here are three of the biggest myths that can trap even the most responsible borrowers.

Myth 1: Clearing your balance keeps utilization low

Credit utilization is an essential factor in your credit score. It’s a ratio of your credit card balance and available credit, so if you have a balance of $500 and available credit of $1,000, your utilization ratio is 50%.

Generally, lenders prefer a ratio below 30%, according to Equifax. So monitoring this ratio and keeping it low is critical if you’re trying to maximize your score.

Here’s the trap: Your card issuer reports your balance to the bureaus on your statement closing date, not your payment due date, as per Experian. That means even if you pay your bill in full every month, the balance reported could be hundreds or thousands of dollars if you’ve been spending normally throughout the billing cycle.

You can tackle this by raising your credit limit or paying off your balances early.

Of course, managing your credit utilization is easier when you have a clear picture of your finances. Knowing what you owe, what you own and where your money is going can help you make more informed decisions about paying down balances and managing debt.

You can also get a real-time snapshot of your finances with Rocket Money’s premium Net Worth feature.

You can link your accounts, including bank accounts, investments, retirement accounts, property, vehicles, and even manually added items like jewelry or collectibles, so you see what you own versus what you owe, all in one place. Balances update automatically, giving you a clear picture of your financial progress without having to manage multiple spreadsheets.

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Rocket Money’s intuitive app offers a variety of free and premium tools. Free features include subscription tracking, bill reminders, credit scores, and budgeting basics, while premium features — like automated savings, customizable dashboards, and more — make it easier to stay on top of your retirement contributions and overall financial goals.

Myth 2: Hard inquiries are only for new credit cards

Most borrowers already know they can’t get a new credit card without a so-called “hard inquiry” on their file. Inquiries fall under ‘new credit,’ which makes up about 10% of your FICO score.

What many borrowers probably don’t know is that hard inquiries also get triggered by applying for a car loan, taking out a personal loan and even some cell phone plans, according to TransUnion.

Now, that doesn’t mean you should avoid all credit. In fact, opening new and different accounts expands your credit mix, which is another key component of your score. Also, some borrowing moves can actually save you money.