We have all received information concerning credit and how to utilize it that may be wrong. It is therefore imperative to analyze the myths and acquire the truths that will assist us to rebuild, maintain or start a good relationship with credit that will last for many years. A lot of us have gotten information that advises us to do away with cards that we do not use or only to use them during emergencies. These practices are presented to us as healthy ways of exercising appropriate credit use. Although there are various credit myths, a little bit of information is all you require to right lots of wrong information. The information is as below:
You should utilize credit cards only for emergency purposes
A credit card that is regularly utilized and paid for on time indicates that you can handle credit in a responsible manner to the credit company. The more activity that a credit card company sees taking place responsibly improves your credit score substantially. A credit card that is used only for emergencies does not give the credit card company adequate opportunity to see how you handle your credit. Regular credit activity that is paid on time manifests responsible handling of credit, and these are the factors that boost credit limits and credit scores.
You should close cards that you have not used in a while
The longer you possess a card, the better it reflects on your overall credit. This implies that a card that you have owned for five to ten years that does not get utilized a lot is still valuable. If cancel that card your available credit reduces and this reflects negatively on your overall credit. Credit maturity is shown by credit age which is your ability to maintain a credit account positively over an extended amount of time. This is attractive to the credit card companies. A wise approach to handling older credit cards that are not used frequently is to plan to make small purchases after every few months, just to keep the card active.
Once you utilize your credit card interest begins to accrue
You will not be required to pay any interest on credit purchases if they are paid in full before the grace period elapses. Interest is charged only on any balances that remain after the grace period. The more you make your payments on time, the more your credit improves and this is shown by your rising credit score. Each on-time payment that is reported to the credit bureau is a positive indication on your overall credit.