Credit cards are an essential financial tool that are globally used as a form of payment. Still even though credit cards are widley used there is still a lot of miscommunication as to how a line of credit actual works. In fact many credit card myths have come about because of wrong or outdated information about credit building. The following are just a few of the most common credit card myths which we have decided to debunk for you.

#1. Spending More Increase Your Credit Score – False

Although some people may argue that the more your spend, the more comfortable your bank is with giving you a higher limit, it just isn’t true. The reality of the situation is that how much you spend has absolutely no effect on your credit score. What does affect your credit score is keeping the amount of credit you are using also referred to as credit utilization low across all your loan accounts and paying your bill every month so you have a strong payment history. 

#2. Checking Your Credit Score Lowers It – False

Checking your credit score doesn’t actually lower it since it is a soft inquiry. When you check your credit scores it is regarded as a soft inquiry and isn’t damaging. When you check your credit score, something called an “inquiry” goes onto your credit report. Inquiries only affect your credit score when they are related to an application for a new line of credit, also known as a hard inquiry. Some other hard inquiries can occur when someone such as a landlord or a car dealership check your credit report for an application.

#3.Credit Scores Can Reach The Thousands – False

Credit scores are 3 digit numbers which mean that they clearly cannot be in the thousands. The highest credit score you can achieve is 850. A credit score of 850 can also be referred to as the perfect score since VantageScore and FICO, two of the main credit check companies use scoring models that range from 300-850. 

#4. Credit Scores Change Every Day – Somewhat True

While your credit score does update frequently, it’s not changing every day. It is all dependent on how often lenders report information about your accounts to the credit bureaus.  That reporting usually happens every 30-45.  

#5. Closing Credit Accounts Can Highten Your Credit Score – False

Beware this myth, because it can be potentntially damaging since what really happens when you close a credit account, is that you decrease the amount of credit available to you. This means that your credit utilization ratio will likely go up in the eyes of the credit bureaus and cause your credit score to go down. 

#6. Your Job and Income Affect Your Credit Score – False

How much you make has no impact on your credit score and it will never show up on your credit report. All that lenders care about is your repayment history. Meaning that as long as you pay back in full or partially before your due date your credit score will not be fluctuating negatively.

#7. You Can Pay to Get Your Credit Report Fixed – False

This one is another harmful myth that many people fall for. Companies that promise to fix your credit can only help you remove inaccuracies from your credit report, which is something you can do on your own. You just have to reach out to your lender directly, but even then this won’t instantly fix your credit score. 

#8. A Debit Card Can Build Your Credit – True

With an Extra debit card you can build a line of credit since unlike a traditional debit card, an Extra card is connected to your bank account so you can only spend what you have to make everyday purchases while simultaneously increasing your credit score. The way this debit card helps you establish credit is by compiling the purchases you made at the end of every month and reporting them to credit bureaus to help build your credit history.

#9. You Can Build Credit As An Authorized User – True

Your credit score can be affected by becoming an authorized user on a trusted person’s credit line. However, for your credit to grow you have to ensure that the credit card issuer reports the account you are authorized on to three major credit bureaus so that the account you are on becomes part of the credit report.  

#10. Balance Transfers Are Not Helpful- False

Balance transfers can be extremely useful for consolidating credit and will usually work best if you have multiple credit cards. Having multiple credit cards can be useful when it comes to balance transfers since you can use them to consolidate debt if your other cards have lower interests rates.

Company Bio:

Extra was founded by Maximilian Hellerstein as a financial services company aimed at allowing people access to a line of credit. Extra is the first debit card that helps you establish a line of credit by compiling the purchases you made at the end of every month and reporting them to credit bureaus to help build your credit history. Extra can connect to over 10,000+ banks in the U.S. by using Plaid, to ensure that your banking information is safe and will never be stored. Anyone 18+ can apply since there is no credit check, and instead only a monthly payment fee that starts at just $7/month. 

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