Today, living on credit has become the new normal. With a long list of dreams, credit cards are preferably used for transactions. Credit cards are possibly the best tools to fulfil your choices and invest money at right places. However, they are quite risky tools and must be used with caution. One must use it with a wise thinking. Highlighted below are the top myths and facts to present a clear picture:
Myth 1. APPLYING FOR A CREDIT CARD PRIMARILY AFFECTS YOUR CREDIT CARD
Fact: Applying for a new credit card only impacts 1 % of your credit score. Application comes later, its firstly the enquiry that goes into counting your new credit card. Too many enquiries can badly affect your
credit card for future. Applying too often for credit cards can again impact your credit scores. Use the card that you get sanctioned.
Myth 2: PAYING UP LESS ON YOUR CREDIT CARD PAYMENT DOESN’T COUNT AS A FALTER
A payment done less than the minimum payment doesn’t affect your credit scores and market position.
Fact: Whenever a payment is missed on the credit card, it reported as a miss not mistake. Though, it will slightly affect your scores and future card application. Keep a timely check on your statement and pay more than the minimum due for a positive influence on the credit score.
Myth 3: A TOO HIGH CREDIT LIMIT CAN BE DETRIMENTAL
Fact: Not always, if you manage your cards specially credit cards well, it doesn’t affect your score. A high credit limit is important for the ones dependent on credit a lot. If on a high credit limit, only a limited portion is used, then it’s a plus to your credit score.
Myth 4: LEAVE SOME BALANCE IN YOUR CREDIT CARDS, TO CREATE GOOD CREDIT SCORES
Fact: Credit cards are always perfect to build healthy credit scores. An unused balance in the card doesn’t provide any extra edge to your records. The best thing to do is paying off bills on time, without a miss.
Myth 5: MORE CARDS, BETTER CREDIT SCORES
Fact: Keeping more cards into your kitty doesn’t necessarily help. About 10% of the credit score is estimated basis the credit type you keep, whether it is a credit card, personal loan etc. Credit companies always estimate a good blend of credit forms.
After reading this blog, you will have a fair idea about the myths and facts related to credit cards. A few basic misconceptions should be cleared by now. The recommendation would be to take credit cards when you have enough financial capacity to pay back.