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5 Credit Card Myths You’d Regret Buying Into

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    5 Credit Card Myths You’d Regret Buying Into

    May 10, 2011

    An apple a day keeps the doctor away; swallowed chewing gum remains in your stomach for seven years; lightning doesn’t strike in the same place twice; cracking your knuckles leads to arthritis. Whether you call them myths, old wives’ tales or urban legends, there is no shortage of misinformation out there being passed off as fact. And while much of the time it’s fairly easy to see through the nonsense, sometimes they seem just plausible enough to indeed be true, especially when conveyed with conviction.

    For a vast majority of myths, this wouldn’t be too big of a deal as buying in would simply result in you eating more fruit or throwing out your gum when finished chewing. However, there are serious consequences for believing some types of myths, especially those regarding personal finance. So beware these five credit card myths and avoid losing your hard-earned money and credit standing.

    Myth 1: Business credit cards are really business credit cards

    You know how you were always told not to judge a book by its cover? Well, that cliché is pretty darn relevant to this credit card myth because so-called business credit cards aren’t really what their name suggests. According to a Card Hub business credit card study, every major issuer that even offers a “business credit card” holds an individual cardholder personally liable for use. In fact, the only difference between “business credit cards” and your typical consumer/general-use card is that a corporation is held liable as well.

    The study also revealed that every major credit card company that was transparent about its practices reports business card usage to the individual cardholder’s personal credit reports. Despite all this, “business credit cards” still don’t receive the same protections as other consumer-oriented credit cards under the CARD Act.

    Myth 2: New rules regarding individual income and credit card applications cut stay-at-home parents off from credit

    You may have heard talk about the Federal Reserve enacting rules that require credit card issuers to consider individual income instead of household income when evaluating card applications. Some believe that this will prevent stay-at-home parents from building credit in their own names. This is not true, however, as stay-at-home parents can either apply for a credit card jointly with a spouse or simply open a secured credit card, in which case all they would need is a valid Social Security Number and at least $200 for the refundable security deposit. (For more information on secured credit cards work.

    These rules, which serve to correct an unbalanced system where credit card companies evaluate household income and personal debts/liabilities, will also curtail credit card overleveraging, thereby helping the economy at large and benefiting everyone, including stay-at-home parents.

    Myth 3: A credit card only benefits your credit score when used

    The correlation between credit cards and credit reports is often misunderstood. In truth, major credit bureaus try to paint a holistic picture of each individual’s experience with credit and therefore consider information about what you do and what you don’t do with a credit card, both the positive and the negative.

    Thus, even if you never use your credit card to make a purchase, your credit score will benefit because the card will be reported as being open and in good standing as well as having low credit utilization and no revolving balance on a monthly basis.

    Myth 4: Always pay what you can

    It’s a natural impulse for someone in debt to want to pay what they can when they can, however this is truthfully not always a good idea. For example, making a payment below the minimum to a credit card company is equivalent to not making a payment at all, as it will not have any positive effect on delinquency. In addition, when you are seriously delinquent or you have defaulted on your debt, making a payment that is not part of a mutually-beneficial agreement with your debt collector will only lengthen the time which you are vulnerable to a lawsuit. Any payment below the minimum that is not part of an official agreement will not buy you any time or favor, no matter what a debt collection representative tells you on the phone (these people often work on commission).

    Myth 5: You can remove negative information from your credit report

    Negative information does not remain on your credit reports forever, but there is nothing you can do to bring about its removal, unless, of course, the information is inaccurate. For the most part, negative information from credit accounts, collection accounts and public records stays on your major credit reports for about seven years no matter what, and negative information about bankruptcies remains for 7-10 years, depending on the type. Companies offering the removal of such information are simply peddling a service that’s too good to be true.

    Filed/discharged/closed Chapter 7 in 2010!

    Regarding #5, I've had good luck in the past disputing 30 days late entries as never paid late after waiting a year. When done sooner it has failed.


      Also regarding #5, it can be done I have seen other boards dedicated pretty much to trying to outsmart the system, even people getting BK removed from their credit!


        Originally posted by alibaba View Post
        Also regarding #5, it can be done I have seen other boards dedicated pretty much to trying to outsmart the system, even people getting BK removed from their credit!
        Do tell....


          Originally posted by IamOld View Post
          Do tell....
          credit boards dot com is one


            As to the above comments about removal of info from credit reports, what a lot of people don't know is that disputed information (if the information is actually correct), is removed from credit reports for about 45 days or so while the dispute is being verified. If the creditor verifies the info as correct, it reappears on one's credit report. If the information is incorrect, it reappears corrected or if it cannot be verified at all, it may get removed. I've seen information disappear on credit reports for several months only to reappear again and be the same old bad disputed information.

            Getting accurate information removed (i.e., BK information) is next to impossible and those that have the time to work the system to try to continually dispute information to keep it off credit reports eventually find that out.
            Filed 5 Year Chapter 13: April 2002
            Early Buy-Out: April 2006
            Discharge: August 2006

            "A credit card is a snake in your pocket"


              So very true Flamingo.


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