Credit Building Myths

There are many myths about credit cards. Undoubtedly, you’ve heard a few of these tall tales yourself. Some of the more common myths can steer us so far off track that we end up doing more harm than good. Never mind what you've heard! Read on to take a look at some well known myths that may surprise you…

Not Paying Your Credit Card Bill In Full

The idea behind this common credit myth is that most credit card companies would rather cardholders have a small remaining balance at the end of each month so that the credit card companies can earn interest on your money. In a sense, paying interest is a way to appease the credit card company and payment in full minimizes their potential for making money off of your money, which could lower your credit score and lead to resentment from your card issuer. This is completely FALSE!

Most importantly, credit bureaus compile the data and information that will make up your credit score. Credit scoring companies actually perform the calculations for the purposes of issuing credit scores. Therefore, credit card companies are simply the source of information but have little to no power to actually issue or manipulate your credit score.

You Must Use Your Credit Cards To Build Credit

The simple act of having an open credit card line in good standing will inevitably improve your credit score. However, using your credit card for purchase and then paying off the balance in full will certainly expedite the process.

Closing Old Accounts Will Improve Your Credit Score

There are many who would advise credit builders to close accounts or render them inactive as a strategy for improving credit. However, in many cases it an actually lower your credit score. Closing out old accounts can impact the ratio of available credit to debt. Closing old accounts unnecessarily can also cause your credit history to appear shorter than it may actually be.

Once A Negative Item Is Paid Off It Will Be Removed From Your Credit Report

Negative items such as late or missed payments are reflected on your credit report for 7-10 years. Paying these items off before the 7-10 year term is complete does not automatically remove them from your credit report. However, once the account balance is at zero the account IS marked “paid”.

I Can Hire A Credit Repair Company To Fix And Maintain My Credit

When it comes to building credit there are no shortcuts. A good credit repair company will help you get negative and erroneous items removed from your three major credit reports as quickly as possible. A great credit repair company will help you recognize the importance of addressing the personal financial habits that caused your credit problems in the first place.

Getting short term, temporary relief from your credit woes may seem like a welcome respite from your credit issues. Having LuxuriousCREDIT is about simultaneously implementing a strategy for cleansing your credit report while also dealing with the underlying financial conditions so that you are empowered to maintain your new financial freedom.

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