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Posted by on Jan 29, 2018 in Finance | 0 comments

Destroying 5 credit card myths

Destroying 5 credit card myths

 

Do you want to know as much as possible about credit cards, boosting credit scores and making the best decisions in this direction? In order to do that, you first must understand that not all the things you hear are true. Credit cards and credits, in general, come with a lot of myths that need to be busted right away so that people know the truth and opt for the correct choices. Doing that is not easy because you will need to pay attention to every single detail and choose what’s the best option for your individual situation. Each person is looking for something different so don’t consider one type of credit generally suitable. You must build your own preferences and get the best out of your financial life. Some of what you’ve heard from family and friends might not be true, so read this to see if what you know is already a busted myth:

1.      Boosting scores

Boosting your score is not possible by closing your unused credit card. Even though many people believe that doing such thing is a sure strategy to make your credit score better, this is only a myth. The moment you close your unused credit cards you only cause the scores to plummet, so this is a case of backfiring. Instead of boosting your scores, you will drastically lower them. Your bank should inform you about this matter the moment you get a credit card, but if it doesn’t, then you might find this out the hard way. Dodge the bullet by paying lots of attention to the terms and conditions of your credit.

2.      Paying debt will remove the records

Another wrong opinion would be that paying off bad debts will entirely remove them from your credit reports. In reality, paying off your debts won’t remove the records. They will still be available in your records, but the card’s status will update saying that the debt was paid in full. Negative information will remain in your reports for years and years, so don’t expect something else any sooner.

3.      Checking the credit report

Checking your credit report won’t affect your credit score in any way, even though this is the popular belief. Nom checking your own credit report is a soft inquiry and has no impact on your score in any specific way.

4.      Paying debt on time means a good credit score

Paying your debt on time is ideal, but it doesn’t guarantee a good credit score. On the other hand, limiting your applications for credit and avoiding excessive shopping will. The only factor that truly matters is your credit card utilization, which should be kept low.

5.      The more money you own, the better the credit score

No, your income doesn’t directly influence your credit score. Your reports do not contain details about your income and credit scores use exactly these reports. As long as it’s not specified in the reports, it doesn’t determine a credit score. Being a billionaire won’t change one thing about your credit score.