Building credit isn’t a new terminology among individuals. It’s a fundamental principle assisting one achieve lots of financial services offered by banks such as loans. However, due to poor credit scores, some end up getting locked out in receiving the loans, better apartments, or even a job opportunity.
All that can become a thing of the past if you consider having a look at the best credit card to build credit. Nonetheless, some individuals fear for these credit cards. They often stay away from them, presuming that it’s a potential debt hazard. That’s isn’t the case when it gets used correctly. Here are the popular fallacies that you ought not to believe at any point.
It’s best to close unused credit cards
It reaches a point in time where you get to stop using some credit cards. Logic would dictate that you shut them down, and only remain with an active credit card. However, just before you do that, slow your roll. It’s because such a move can do more damage to your credit score than you anticipate. It’s a scenario that could jeopardize your account’s average age. It could also minimize the credit availability amount. Any drop-in credit utilization ratio is no good. No matter how old the credit card is, you need to let it remain open.
There’s a need to continue topping up the annual fees
Most people believe that you have to keep paying the credit cards’ yearly charges at all times. Thus, they end up avoiding the credit card altogether to avoid such a financial burden. However, you don’t have to suffer paying such fees while you can get credit cards that have zero annual charges. You need to take time and research for these credit cards and read the fine print to ensure it’s a sure deal. As credit cards with zero annual fees are in existence.
Having more credit cards is excellent
Some people tend to accumulate lots of credit cards for their spending. However, you need to know that your credit score’s percentage is a result of the credit you have. The basic idea is to have a better mix of credit cards, fixed loans, mortgages, among others. It’s to have a variety of loans. However, having all credit cards leaves the lender in doubt about your credit history score.
It’s good to carry a credit card balance forward
Another popular notion is that you don’t have to pay all your credit card bills entirely. However, this is one of the greatest misconceptions that isn’t any good. You need to be extra careful as choosing this route might put a strain on your finances. It would mean you have to deal with the outstanding amounts at a later date. It can ultimately increase your credit utilization ratio, which direly impacts your creditworthiness in days to come. It’d assist if you paid off all your credit card bills in full.
Before believing any idea circulating about credit cards, you need to verify its validity. These misconceptions always hold one back from getting the excellent benefits availed by credit cards. However, you ought to stop believing some of the popular fallacies to get the best credit card to build credit.