One common myth that many, including myself, have fallen for is the idea that carrying a balance on your credit card improves your credit score. This belief leads people to think it's beneficial to keep some debt on their cards as a way to show they can manage ongoing credit. However, this is misleading and can actually be costly due to interest charges. The reality is quite different. What genuinely affects your credit score positively is making regular, on-time payments and keeping your credit utilization low (ideally below 30% of your credit limits). Carrying a balance does not enhance your creditworthiness; it merely increases the amount of interest you pay to the credit card companies. Managing your credit wisely involves paying off your balance in full each month if possible, which avoids unnecessary interest and helps maintain a good credit score. Always check your credit regularly and understand how your behaviors impact your credit file and overall financial health.
Utilise credit cards correctly and escape debt by only using them for things you can afford to settle in full each month. This allows you avoid accruing interest, and keep your purchases in check. By defaulting to your payment in full, automated payments help ensure you never miss a due date, which can lead to costly fees and impact your credit score. One more great practice is to keep your utilization below 30% of your limit, thus helping you for a consistently strong score. But try to limit yourself to a card or two that provides rewards that match your lifestyle, e.g. cash back for groceries or travel points, so you can enjoy the rewards without sampling the commitment. This enables you to have the rewards with less guilt and less risk of indebtedness.