By Lois Guchu


5 Min. To Read

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Having good credit scores opens many doors. Through judicious use of credit cards, you can get the credit scores you need to get approved for a home or car loan, rent a nice apartment, and even get a job if the employer does credit checks. Yet, a surprising number of Americans who use credit cards but don’t really understand how using their cards relates to building and maintaining their credit scores. NerdWallet found this out in a recent survey and shared its findings about some of the myths credit card users believe that actually have a negative impact on their credit scores.

Myth #1: You Start Out With Good Scores Around 11% of Americans believe that new credit users start with perfect credit scores, according to the survey. They believe that credit scores go down over time as issues related to using or paying the cards come up. The fact, though, is that people who don’t have credit scores, meaning they’ve never borrowed money from a source that reported to the credit bureaus, start with a blank slate. Once you get a credit card or borrow money from a source that reports to the major credit bureaus, credit score providers start calculating and generating credit scores for you based on your credit usage, paying habits, and credit history.

Myth #2: Carrying a Small Balance Helps Your Credit Score Credit card users often get confused about whether or not they should carry a balance because they misunderstand credit utilization. About 40% of Americans think that carrying a small balance can improve your credit score. While it’s true that keeping your credit utilization below 30% can boost your credit score, you get nothing out of carrying the balance. So if you have a credit limit or $1,000, for example, and you charge $289 to the card, it’s best to pay off the balance as soon as possible. You pay interest on balances that carry over from month to month, but the balance itself doesn’t do anything to help your credit score.

Myth #3: A 600 Credit Score Is Good Enough Everyone knows that having a credit score below 600 limits your options when it comes to credit cards and other types of loans. It’s shocking, though, that 21% of Americans think that a credit score of 600 or above is all that’s needed to qualify for any credit card. In reality, credit scores in the 600s are considered to be low and limit your options, too. A credit card issuer might approve you for a card with credit scores in the 600s, but it’s unlikely that you’ll get a high credit limit or a favorable interest rate and repayment terms. Credit scores range between 300 and 850, and you usually get access to the best credit cards offering the best interest rates and terms with credit scores in the 700s.

Myth #4: You Don’t Need Good Credit Scores to Get a Good Cell Phone Package Cell phones are as necessary for daily living as shoes and socks, yet half of American’s don’t know what their credit scores impact the kinds of packages available they can get. This may be because people have an option to go the prepaid route if they so choose, but having good credit scores can get you a lower monthly bill and more minutes with the major wireless carriers. They also help you avoid the hefty security deposits charged on nicer-quality phones. Low credit scores might also result in you paying higher deposits on utilities such as electricity and gas, and result in higher car insurance payments.

Myth #5: There’s Only One Credit Score FICO’s the most well-known credit score provider, so it’s understandable that close to 25% of Americans think they only have one credit score. The fact is that there are other credit score providers including Equifax, TransUnion, Experian, and VantageScore. Every credit card issuer has its preferred credit score source, and there’s a good chance you won’t know which one the issuer uses when you apply for a credit card. It’s a good idea to check your credit scores from several providers annually -- or more frequently if you’re building credit -- to know what they are. You’re entitled to free credit reports once a year from, but remember that the service only gives you credit reports, not credit scores.

A surprising number of Americans who use credit cards don’t really understand how using their cards relates to building and maintaining their credit scores.

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