The following is a guest post. Enjoy! If you’re thinking of getting a credit card, there are probably a few misconceptions that are often stated as fact. While there’s often a grain of truth in the common myths, it’s best to get a good idea of what you are going to be expected to do as a credit card owner. If you need a bit of financial help before payday, a credit card can be a good option. When used correctly, they can help to build your credit score – but only consider applying for one if you are sure that you are able to maintain repayments on what you spend, plus the interest. Here are some credit card myths set straight: The advertised rate is what I will get This isn’t necessarily true – the typical APR is not always offered to applicants. The rate is affected by your income, your credit rating and your current financial circumstances. If your credit rating is poor, you will be offered a much higher APR – or perhaps won’t be offered a card at all. A spokesperson from Yorkshire Building Society suggested: “Set up a regular savings account and shop around to make sure you get the best rate. Ensure that you are on the electoral roll as this can improve your credit score. Review your day-to-day spending to see if you can make any cuts to increase your savings, then set up a budget for essentials and stick to it.” It’s okay if I go over my credit limit as long as I pay it back before payment is due Different lenders will charge different prices for exceeding your credit limit. Lenders can also boost your interest rates if you go over your credit limit – even if it’s just for a day or so. If I try to check my credit rating, it will hurt my credit score You can check your credit rating whenever you want – it’s a good idea to check it before applying for a credit card so you can be sure that you will be accepted. You can check your credit report with any of the major credit providers, such as Experian. Lenders will not be able to see that you have checked your score when they view your report. It’s okay to apply for multiple credit cards at once Whilst applying for multiple credit cards at once doesn’t hurt your credit rating, every lender who views your report will leave a ‘hard footprint’. This means that lenders can see if other lenders have checked your credit report and lots of footprints looks poor. I’ve not had a credit card before, so my credit report is bound to be fine This isn’t true – there are some payments which can include (but are not limited to) utility bills. If you are taken to court over council tax arrears, it can affect your credit score too. As long as you use it responsibly and always make sure that you don’t use more than 70% of your credit each time, there’s no reason why you can’t own a credit card.
Credit Card Myths: Debunked
October 16, 2013 by