3 credit score myths that are wildly untrue
Today, I am dispelling three common credit card myths so that you can focus on the things that will actually improve your credit score.I applied for my first credit card shortly after my 18th birthday and I remember being told by a well-meaning colleague at work that I should try to use the card regularly and carry a small balance. The rationale was that by using the card and paying a small amount of interest monthly, the bank would love having me as a customer and give me a better credit score.
Fortunately, I was a curious teenager and fact-checked that claim, because it’s not true. And not following that advice hasTo begin, your credit score is not determined by your credit card company or any other lender. Your credit card issuer , provides the credit bureaus with regular updates on your payment and account history. These credit bureaus simply receive information from your lenders and use it to calculate your credit score.
Second, carrying a balance on a credit card will increase your utilization, which could actually lower your score. In general, using less of your available credit is better from a credit score perspective. The important lesson here is that it’s never wise to pay interest on your credit card if you can avoid it. Always pay off your full statement balance in full if possible. It will help you lower your credit utilization while avoiding costly interest charges.
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