Jefanie Genilla
Credit cards really do come in handy when cash isn’t available. But are you having second thoughts about getting one for fear of not being able to manage your expenses? Are you afraid to incur too much interest rate and get yourself into a never ending cycle of debt?
Yes, these fears are reasonable. But these are actually due to the long-standing myths we’ve come to believe over the years. That being said, here are the five myths we should stop believing about credit cards and scores:
Myth 1: Paying off all accounts and closing them is the surest way to improve your credit score.
Fact: The most important thing to remember is to maintain a positive credit score. That means one should show that you pay your accounts consistently and religiously without missing deadlines. So, it’s not necessary to have zero outstanding balance.
Myth 2: You can’t get any type of loan if you have bad credit.
Fact: Individuals with bad credit have limit access and choice of loan solutions. However, many credit providers today, banks and private lenders alike, have started launching loans even people with bad credit records can qualify. Specifically, Loan Restructuring Programs and Collateral Loans are the two best options.
Myth 3: Credit cards can only get you into debt.
Fact: Managing a credit status requires discipline and financial awareness. Those who don’t exercise control over their expenses, buy impulsively and miss payments are those who end up in deep debt.
Myth 4: Assets and income affect credit score.
Fact: Credit score depends on your payment behavior. The total value of your assets and investments has little to do with how banks rate your credit status, although they will consider your capacity to pay. Financing providers only consider the assets and income streams you report to them in relation to the type of loan you’re applying for.
Myth 5: Age affects the credit score.
Fact: Financial providers evaluate the duration of your loans, how long each has been opened and how long you’re going to repay all your credit. This is one way for them to assess your relationships and transactions with other lenders and whether or not you’ve been a responsible borrower over the years.
A credit card might help you in the long run because gives you access to quick cash. However, it also helps to know what’s true and what’s not about credit card and how you’re going to be rated. By keeping in mind the points above, you’ll be able to explore your credit options. Should you need tips regarding credit card scoring, feel free to call our Loansolutions PH consultants for advice.
