Debunking Common Credit Card Myths

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A survey done by Credit Card Insider shows we don’t know as much about the plastic cards we keep in our wallets as we might have thought.

42 percent of people believe that using a debit card will help build their credit history. Well, that’s not the case. Debit cards do have benefits, but your charge history is never sent to a credit reporting agency.

A credit industry analyst says the best way to build your credit score is to use your credit card, and pay your bill on time, every month.

79 percent thought credit scores are a part of your credit reports. This is another myth. But, there are important things that do come from a credit report.

Credit Card Insider Credit Industry Analyst Nathan Grant shares, “Another important factor is what you call your ‘credit utilization. And what that is, is the ratio of your total credit limits to how much credit you’re using. So, if you have a lot of credit cards, and they’re all maxed out, you have very high credit utilization and that’s going to be bad for your credit scores.”

He says it’s good to keep many accounts open, but you want to keep a low balance on all of them, at all times, to improve your score.

Click here for more information on common credit card misconceptions.

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