3 Credit Card Myths Debunked
By: Caydon Burnett
There are a lot of myths surrounding credit cards and how certain behaviors can impact the health of your credit. Below are three of those common myths, you might have heard of, that aren’t so accurate when you evaluate them:
(1) There's a 'quick fix' for your credit score.
Some believe there are quick behaviors to get their credit score up fast. The truth of the matter is that a credit score is a track record, not a quick snapshot. So, being consistent in your credit habits is key, and will pay off over time, even when you don’t see results right away.
(2) Checking your credit report will hurt your score.
This is not true. Some confuse soft inquiries and hard credit inquiries. When you check your own score, you’re utilizing a soft inquiry, which has no impact on your credit. Hard inquiries come from lenders and other third parties who pull your score when applying for a loan, for example. A hard inquiry lowers your score because it suggests you might be taking on new debt or credit in the near future, which means more money on the line. So, no, you don’t take a hit to your score when you check your credit yourself.
(3) Opening or closing more cards will bring up your score.
The main foundation behind this belief is the fact that, when you have more credit open, your credit utilization ratio (as it sits) goes down. You have more, so you can use more. However, opening multiple lines of credit will result in more hard inquiries, and closing them shortens the length of your credit history/age, which plays a role in your score. Each new line of credit that you open will likely involve a credit pull, which we discussed is a hard inquiry that will affect your score. Since credit age also plays a role in your score, closing multiple cards to open new ones will refresh the time you’ve had those lines of credit, thus impacting your credit score. However, making sure the card(s) you DO have make sense for you to keep and use is also important. With a lot of credit card companies offering cards with high variable interest rates, it can be hard to find the right one. A great alternative option is one of Clarity’s fixed rate Mastercards. These cards feature a low FIXED rate that you can count on, no annual fees, and even a generous rewards program (platinum option). Click here to learn more about it.