7 Credit Card Myths

by World of Finance on November 20, 2011

Awhile back we received an email from a reader who wanted to share a video created by Credit Card Canada about credit card myths with our audience. The information provided in the video holds true for both the United States and Canada.  We wanted to thank Kristy for sharing this with us as we always stress the importance of understanding and utilizing your credit score to your full-advantage!  Previously we discussed 6 reasons why your credit score matters and what makes up your credit score.  The video helps bring it all together and does an excellent job explaining the following 7 myths:

1) Checking your FICO score hurts your credit

2) Closing accounts will raise your credit score

3) Paying off debts instantly restores your credit

4) All you need to do to maintain a good credit score is pay your cards off in full, on time.

5) “No limit” credit cards have no spending limit for purchases.

6) An ID is required when you pay with a credit card.

7) Your credit card account won’t show on your credit report until you activate it.

Check out the video to see these myths dispelled:

Did this video help answer your questions about credit cards?  If you learned something new from the video, please share it with us.

Image: FreeDigitalPhotos.net

 

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10 Responses to “7 Credit Card Myths”

  • MoneyCone says:

    A very informative video WoF! There are so many misconceptions regarding credit scores, I’m glad you posted this video!

  • Good resource. Although credit cards are dangerous for non disciplined people it’s perfectly safe and money earner for people who knows how to use them. Effective use of credit card can increase your credit score gradually.

  • YFS says:

    Tons of people are taken back by #3. I always have to remind clients that it will take time for paid off debts or collections to reflect on your credit score. You can speed up the process by sending a dispute. but, even that takes time to funnel through the system

  • Neo says:

    Thanks for the video! I always thought that closing accounts really did hurt your credit score. I have been holding on to a few accounts that I never use just because I did not want my credit score to drop. Guess I will take a second look at closing down those unnecessary credit accounts.

    • Closing a credit card account(s) can effect you in two ways when it comes to your credit score. It will lower your total available credit which could increase your utilization rate (credit used/total credit available)- this is something you want to keep low. Also, it will increase your average age of open credit lines. For further explanation see the link within the content titled What Makes Up Your Credit Score.

  • What about consolidating two cards into one? I know it keeps your average age of credit the same and your total available credit the same, but does it lower your credit score?

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