Credit cards
Credit Cards

 

Credit cards
Here’s a credit card urban legend for you: Carrying a balance on your credit cards each month doesn’t help your credit score at all.

On-time payments only account for 35 percent of your FICO score, and those payments are the same regardless of whether you pay your credit card in full each month or carry debt on your credit card.

When you leave a balance on your credit card each month, not only does it not help your credit score–but you’re paying extra money to your credit card issue that you don’t even have to pay.

In some cases, a zero balance on your credit card is even reported as a payment by your credit card issuer to the reporting companies.

I learned about this thanks to Cathie Ericson’s list of 5 Credit Misconceptions That Could Ruin Yours over at Grow By Acorns. Ericon’s listicle is full of useful information that puts you one step closer to being a personal finance ninja.