Does Anyone Know How Credit Cards Really Work?

The fact is it takes lengthy research and education to truly understand the credit system in its entirety, and many devote themselves entirely to making it their career.  Credit lenders, banks, credit card companies, and almost any kind of big business has people on staff whose entire job is to fully understand the system.

But while it might require a college degree to get a job in the field of credit, you don’t need one to get insight into how the credit card system works.  With a little research, you can quickly gain knowledge in credit that you can use to your advantage.

5 Quick Facts About Credit Cards

A rudimentary understanding of the credit card system can be gained with just the following 5 facts:

•    Many people believe that if they close a 10-year-old credit card they will lose all of the positive history associated with it.  That isn’t true.  The age and history of the card will remain on your credit report as long as the bureaus themselves don’t remove it from your report.  That history will continue to be considered even if the credit card is closed for the next 10 years.

•    Another commonly believed myth is that a credit card will stop aging after it is closed.  But if you close a credit card today that has a 10-year history behind it, at the end of the year it will have 11 years of history.  So it will go until ten years after you have closed the card when it is finally deleted from your credit report with a 20-year history.

•    Credit cards do not have to have a negative balance in order to build credit, as is commonly believed.  As long as the credit card is open, acquiring charges, and being paid on, it is reporting to the credit bureaus.  In fact, it is usually a better idea to keep the balance at zero, charging and paying in the same billing month to keep positive reports flowing.

•    New store credit cards aren’t necessarily a bad idea, as many people think.  In fact, store-specific credit cards usually have lower criteria for approval, making them much easier to qualify for.  With a single store credit card, you can boost your credit score, raise your limit ceiling, and improve your overall standing.  However, the temptation to over-use your store credit can quickly sneak up on you and build debt that could be bad for your credit report.

•    Many people also believe that a good credit card history will automatically override other sources of credit.  While a credit card is a good way to build and maintain credit, it is only a stone in the river combined with other lines of credit such as furniture payments, loans, or delinquent medical bills.  A credit card alone won’t fix your credit, you must keep all of your lines of credit in check.

Congratulations!  You now know more about credit cards and how they really affect your credit score than the majority of credit card-carrying Americans.

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For more information on how to build, repair, and maintain a healthy credit score with your credit cards and other lines of credit, contact Credit Absolute – the most trusted name in Arizona Credit Repair.