Myths are common and can be highly entertaining, but when it comes to your credit, you want the facts. Unfortunately, there are some credit myths that can really end up costing you.

You Have to Maintain a Balance

While it is true that you need to use your credit card from time to time in the early days, there is no need for you to keep a balance on your credit cards. All that does is allow credit card companies to charge you double digit interest on things that you bought a long time ago. You do need to use your card, but that does not mean maintaining a balance on it. As long as you establish your credit, there is no reason why you shouldn’t pay off your cards at the end of each month (if you have the money to do so).

You Should Close Accounts When You Pay off the Card

This actually does the exact opposite of raising your credit score. One of the things companies look at is how long you have had your credit cards, and the older your accounts, the better your score. The only reason to close a card you have paid off is if you are charged a fee to have it.

You Shouldn’t Have Too Many Credit Cards

It really isn’t about how many cards you have, but how much you owe on the credit cards. I have about a dozen credit cards, but I only have balances on three of them. I do need to periodically put a balance on the other cards (most companies will close your account if it is inactive for too long), but we pay off those balances within a month. As long as you don’t carry a lot of credit card debt and stay regular on your payments, it really doesn’t matter how many accounts you have. It does mean you need to monitor more in case of identity theft, but that is a different matter and if you check on a schedule it doesn’t take all that long.

If You Pay Late, It Hurts Your Credit Score

This is not necessarily true. If you make a payment within 30 days of the due date, it is very likely that the late payment will not be reported to credit bureaus. If you completely miss a payment, that will count against you. If you can’t make a payment, it is always worth the time to call the credit card company and see about making arrangements. Most will be willing to work with you during difficult times. You will probably be charged a late fee, but that does not damage your credit score.

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