Some people are afraid of credit cards because of potential debt, but credit cards can be beneficial when used responsibly. Many myths about credit cards scare consumers into making the wrong decisions. Here are 3 myths we often hear about credit cards.
Myth #1
Using your debit card will boost your credit score!
Many people think debit cards boost credit scores because the card has Visa® on it. This does not mean your debit card provides the same benefits as credit cards. In fact, owning and using a debit card has no effect on your credit score. “Credit cards are always bad” is a common misconception. While credit cards can become a problem if not managed responsibly, a credit card is one of the easiest ways to establish and build credit. It’s important to pay bills on time and keep balances low to avoid negative effects on your credit score.
Myth # 2
Keeping a balance on your credit card is bad!
Many credit experts suggest keeping a small balance on your card rather than paying it off because it shows you actively use it. When lenders look at your credit report, they can see how you manage debt and if bills are paid on time.
Myth # 3
The more credit cards you have, the better!
Having a lot of credit cards is not always beneficial. A percentage of your credit score is figured by the type of credit you have. A good rule of thumb is to have a variety of loans. A good mix includes a credit card, mortgage or fixed loan. Having all credit cards does not give lenders confidence in your credit history.
Credit cards can be beneficial for improving credit scores when used responsibly.
NC Community Credit Union offers low, fixed-rate credit cards for qualifying members!