Credit scores can be a tricky concept to understand when it comes to credit cards.
Are they related? If so, how are they related? Can I get a credit card if I have bad credit?
Sometimes there seems like a direct relationship to your credit score and your credit card use. Other times, there isn’t a direct connection between the two.
Let’s explore five myths about credit cards and credit scores.
Myth 1: Applying For a New Credit Card Hurts My Credit Score
If you’re constantly applying for new credit cards and running up a balance on each card, that behavior will hurt your credit score.
However, applying for a new card if you need a new line of credit won’t ruin your credit score.
When you gain additional credit, this can actually lower your credit utilization ratio and increase your credit score.
The trick to busting this myth is to not run up additional debt on multiple cards. When you open a new credit card, use it for a specific purpose. Then pay it off.
Myth 2: I Can’t Have a Credit Card Balance and a High Credit Score
It’s possible to carry a balance on your credit card while maintaining a high credit score.
Your credit score is a mix of financial transactions. Your credit card activity is not the only sources of financial transactions.
Avoid keeping a high balance on any one card, or keeping small balances on multiple cards. But, it’s a myth that people with high credit scores pay off their complete credit card balance every month.
Myth 3: Canceling My Credit Cards Improves My Credit
The opposite can be true for this myth. Canceling available lines of credit can do more harm than good to your credit score.
When you pay down a balance to zero, stop using the card. But keep the line of credit open for a boost to your credit score.
Myth 4: Prepaid Cards or Debit Cards Are Better Than Credit Cards
If you need to establish a credit history for a loan, a credit card helps build that history–whether you use the card or not.
Debit or Prepaid cards and debit cards aren’t credit. These cards don’t improve your credit score or history.
Myth 5: I Can’t Change My Interest Rate
Interest rates for many credit cards are high. But you aren’t stuck with high rates.
If you are a good customer with an established history with a specific credit card, call and request a lower rate. An estimated 69% of people who ask for a lower rate–get it.
Don’t Believe the Myths About Credit Cards and Credit Scores
You can improve your credit score in many ways. Sometimes that starts with refusing to believe the myths about credit cards and credit scores.
If you’re inspired to look for a new credit card after we’ve busted a few myths, check out our thoughts on the best credit cards of 2019. From cash back to miles or points, choose the best credit cards for your needs.