5 Common Myths about Credit Card Usage and Credit Rating

Many people have at least one credit card today. These lending solutions can serve as useful tools for scoring deals on travel costs, using airline miles, getting cash back on expensive purchases, etc. Some cardholders even have several cards to maximize bonuses and benefits. 

On the other hand, if you can’t handle debt and aren’t responsible enough to repay it on time, having credit cards may also lead to high-interest debt or having a bad credit rating. Of course, there are always such sites like cashnetusa that allow you to get loans even with a poor credit score.

But if getting a credit card opens new opportunities for you and fits into your present financial reality, it’s better to be aware of all possible pitfalls of using credit cards.

Important Facts About Credit Rating

A recent survey shows that one in eight American citizens don’t know their credit score at all. The poll of 2,000 consumers found out that 13 percent of respondents were unaware of their credit rating. Although other people knew their rating, 46% of them haven’t checked their credit in over two months. 

A whopping 71 percent of respondents don’t understand how poor credit may affect the quality of their lives and prevent them from the life they desire to live. Thus, it’s necessary to admit that knowing your current credit and learning about the consequences of being a low credit holder is important for every consumer today.

A credit card may help you build your credit. Having good or excellent credit offers you a chance to qualify for lower interest rates and more affordable fees on various lending products and even get approved for a bigger mortgage.

On the other hand, there exist several myths about credit card usage and credit ratings. Keep on reading to find out 5 common myths that are completely false and what factors determine your credit rating.

Myth 1: You Need to Keep a Balance on Your Card to Build Credit

Leaving a balance on your credit card isn’t the best solution to building your credit. If you carry a balance on all cards from month to month you will only have to pay a lot in interest. The truth is that every cardholder should remember to repay their bills on time and avoid carrying a balance on their cards at all. 

This is the best practice so try to pay the balance on your credit card on time or before the due date. It will help you lower your credit utilization and build your credit.

Myth 2: When You Repay a Card, It’s Best to Close It

In reality, closing your card may harm your credit. You don’t need to close all of your cards after you have paid the balance on them. If you do so, it will lower your rating and shorten the length of your general credit history. It’s much better for your credit history to keep your card alive with very little effort if you put a small subscription like Spotify or Netflix on it.

Myth 3: The More You Spend the More Your Credit Rating Boosts

The amount you spend each month doesn’t directly affect your credit score. It’s more about making on-time payments and spending your funds responsibly. Keeping your credit utilization ratio below 30% is what can really help to build your credit. Make sure you pay the bills each month on time if you want to have a strong payment history. 

Myth 4: Having a High Credit Limit Is Harmful

If your credit limit is $10,000 and higher, you may suggest the creditor will view you as a person who spends a lot. But it may be actually the opposite and even be good for you. If you are self-organized and control your expenses, a higher limit only means your credit utilization ratio is higher or lower. 

Financial experts advise consumers to have this ratio below 30 percent. The lower it is, the better for you. Utilization rate means the amount of credit a person uses divided by the total credit limit across your credit cards. 

Keep in mind that you shouldn’t use too much of your limit. Only spend the amount you can afford to repay each month.

Myth 5: You Should Only Pay Down the Minimum Due Every Month

The truth is that you should pay more if you can afford to. If you can’t pay more than the minimum monthly payment, it’s normal. However, if you can, you should try to pay more. 

Keep in mind that paying down the minimum payment on each credit card is the smallest amount the service provider will allow you to pay on a monthly basis.

What Factors Determine Your Credit Score

Credit utilization and regular payments determine your credit rating. It’s always good to monitor your credit. There are two types of credit pull – a hard and a soft one. A hard inquiry is often conducted by traditional crediting organizations such as credit unions and banks. A soft credit check is more beneficial and less harmful for consumers as it doesn’t damage their credit rating.

Another important factor to define your credit rating is credit utilization. Having poor credit means borrowers experience issues securing debt or may only qualify for high-interest rates on lending solutions and mortgages compared to consumers with good credit. 

Having a low utilization rate is beneficial as it demonstrates that a person is a responsible borrower and manages to pay down existing balances on time. 


It’s essential to know your current credit rating to understand how well you manage your debt and whether you need to improve it. Although many Americans aren’t aware of their credit scores, it’s your responsibility to monitor your rating frequently and boost it if necessary. 

Keep in mind these common myths that we’ve just busted. If you don’t know the true facts you may end up having to pay more money. Remember to utilize your credit cards responsibly and pay down the balance each month.

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Mark Meets
Mark Meets
MarkMeets Media is British-based online news magazine covering showbiz, music, tv and movies
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