ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

5 Common Credit Myths That are Hurting Your Credit

Updated on June 30, 2016
Source

Credit is one of the most necessary aspects of financial success, and yet it is also one of the most poorly understood. A variety of myths surround the use of credit, and some of them can result in severe consequences for your credit history and score. Learn to spot these credit myths so you can make sound decisions as a credit consumer.

No Credit is Better than Low Credit

From buying a car to getting your first apartment, there are a variety of situations in which a lack of credit can actually be worse than low credit. Begin building your credit through prepaid credit cards, being added on to an existing credit user's account or applying for low-limit cards and making timely payments.

Always Keep a Balance

The old myth that you should always keep a balance on your credit accounts is simply false. Paying off your credit balance in full is the only way to avoid the accumulation of interest. Keeping a balance neither improves nor harms your credit score. Making regular, timely payments and keeping a low balance is the only guaranteed way to boost your credit rating.


Source

Having More than One Card Will Hurt Your Score

It is perfectly acceptable to hold more than one credit account. The issue arises when you have many different cards, each carrying a high balance. Opening a new credit account typically only results in a five-point hit to your credit score, which is not typically enough to make a difference in any major credit decision. In fact, many credit users choose to open a lower interest account for the purpose of transferring an existing balance to spread out their use of credit.

Refuse Credit Line Increases

While it may seem like common sense to avoid the temptation to spend that comes with accepting a higher credit limit, credit line increases can help boost your score if used wisely. The percentage of credit used is a significant percentage of your FICO score, so it makes sense to reduce the ratio of debt to credit wherever possible. Accepting an increase of your credit limit while maintaining your current spending patterns is a sensible way to improve your credit without maxing out your accounts.

Inquiries Always Damage Your Credit

While applying for new lines of credit does take a toll on your credit score, many inquiries, such as those issued by automobile insurance companies and rental agencies, do not have a significant impact. These inquiries are known as soft inquiries and they are standard in the world of credit. However, you should be careful of applying to too many new credit accounts at once. Not only is this risky financial behavior, but it can send up a red flag to any person or organization who issues a credit check.

Learning to spot financial myths begins with understanding their origins. Now that you know the origins of these common credit myths, you can make more informed decisions as a credit consumer.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)