In the world of credit and credit cards, there's a vicious lie going around that too many people believe, and they don't realize it but it's HURTING their financial health and could someday prevent them from owning a house or car, or even holding a job.
The lie is a shocking untruth that is somehow perpetrated year after year, even though it's not true at all. Perhaps you've heard the lie yourself, told by a friend or especially a parent or grandparent.
Here's the lie: "I don't want a credit card because I want to maintain a good credit score." Or perhaps you've heard it like this: "If you want good credit, make sure you don't owe anyone anything." Or perhaps you've heard it like this: "I finally fixed my credit so I'm cutting up all my credit cards in order to maintain my good credit."
Here's why this lie is false: There's an underlying belief that we all start with a perfect credit score and, as we take on debt in our lives, that perfect credit is weakened. The more debt you take on, the worse your credit score gets. And then, as you rebuild your credit, you'll be able to maintain great credit again if you don't take on any more debt.
It's a total lie... perhaps it's not told maliciously but it's completely untrue.
Here's why the lie is wrong: We don't start with perfect credit, and it doesn't decline as we take on more debt. We don't start with bad credit either. We actually start with no credit score.
Here's the truth: We start with no credit score and our score is established as we take on credit. For example, a college student (who may have no credit score at all since they've lived with their parents and never needed a loan before) may get a credit card with a small credit limit. That established their credit. Then, as they carefully use that credit card, their credit score grows. Over time, their credit score gets higher as they use their credit card and pay it back on time. The credit card company grants them an increasingly higher credit limit as a reward. The credit card holder continues to pay back the credit card on time and their score continues to grow.
So before you jump on the "credit cards hurt your credit" bandwagon, take a moment to investigate the truth. You'll discover that credit cards are a credit tool that you can use to actually build HEALTHY credit, which will allow you to borrow bigger amounts -- which may someday include a car loan or mortgage.
Don't believe the lie! The truth is out there and people who take a moment to learn the truth will benefit!