Credit Misconceptions You Should Never Believe

Your credit affects multiple aspects of your life, so it is therefore crucial that you maintain a solid score at all times. There are quite a few misconceptions people hold about credit that can be very dangerous. If you buy into anything of these things, you could end up facing some pretty serious consequences. The more you educate yourself about credit, the better equipped you will be to make intelligent decisions. It is particularly important to educate yourself if you are trying to boost your credit score because it is low.

Taking Out a Loan Will Lower Your Credit Score

The fact is that simply taking out a loan is not going to damage your credit in any noticeable way. This misconception comes from the fact that lenders run a credit check on applicants, which counts as a hard inquiry. While this can temporarily lower your score a bit, it is nothing to worry about.

In fact, getting a loan can actually help your credit quite a bit if you pay it back in full by the required date. This is actually a pretty common method that people use to increase their score, so it’s something you should consider doing. There are a lot of private lenders that can help you out with borrowing money quick if the need arises.

You Shouldn’t Have a Credit Card

Some people are very apprehensive about getting a credit card because they are worried about what it will do to their credit. Getting one credit card isn’t going to harm your score, but you shouldn’t open a lot of new accounts at one time. As long as you use your credit cards responsibly, nothing bad is going to happen.

You can improve your credit in a very big way by just paying off your balance on time each month. Make sure that you can use a credit card responsibly before you apply for one. You don’t want to use your card for just anything, because it is a slippery slope that can lead to major debt.

Maintaining a Balance on Your Card Helps Your Credit

You might have been told that having a balance on your account at all times is a good idea, but this is just not true. It is important that you take care of your full balance each month, because otherwise your credit is going to take a hit. Simply paying the minimum amount is only going to get you in trouble, both financially and with your credit. This is a basic part of being a responsible credit card holder. Make sure that you keep your credit utilization hovering around 30% for the best results with your credit.

Nobody Should Have More Than One Credit Card

It is perfectly fine to have more than one credit card, and having multiple cards can actually benefit you tremendously. This is a great way to get major cash back rewards, but you have to use each card responsibly. Make sure that you keep a close watch on the balance of each card so you don’t end up falling into a deep pit of debt. This will keep your credit utilization rate lower, which is good for your credit. You shouldn’t get more than one card at a time though. It is a good idea to leave a significant space of time between new cards.

You Should Always Reject Credit Limit Increases

A credit limit increase can definitely be a good thing, so you don’t want to reject it outright. You will be able to use this to your advantage in a big way. It is important that you not utilize all of the credit you are given though. This is where a lot of people get into trouble, so you will need to be careful. As discussed above, you should only utilize around thirty percent of your available credit. This will give you the best chances of improving your credit in a very real way.

There is just One Credit Score

The truth is that everyone has numerous credit scores, and it is a good idea to keep track of them all. Your scores are constantly changing, usually in small ways. This is not reason to get upset though, as it is perfectly normal. There are tons of different things that can cause a minor shift in your score. You will be able to find out what your scores are without paying anything, and it’s a good idea to get this information at least once each year.

When you take the time to learn the truth about credit, you will be in a much better position to strengthen yours as a whole. The better your credit is, the stronger your financial situation will be. Those who have good credit usually don’t have any problems with getting excellent deals on loans for cars, homes and other things.