The elusive credit score — countless consumers across Florida are constantly trying to improve their scores. After all, better credit score can lead to better financial opportunities, like home mortgages and lower interest rates on credit cards. However, one pervasive myth may actually be hurting consumers and pushing them to accumulate unnecessary credit card debt.
Many people believe that carrying a constant balance on a credit card will improve their credit score. There are five main criteria used to determine a credit score, and none of them involve carrying a balance. However, as this myth encourages consumers to keep money on their cards rather than paying them down, it could influence one of those criterion — how close a person is to their spending limit.
So if it is not helping, what does carrying a credit card balance actually do? Ultimately, it increases debt. With rare exceptions, these balances accumulate interest, increasing the overall debt. With the average household owing about $6,375 in credit card debt, paying anything extra could impose an extreme financial burden. Experts advise consumers to instead prioritize paying on time, as this has a positive influence on their credit score.
Credit card debt is ubiquitous in current society, and yet it often seems impossible to lay to rest myths regarding their best use. Unfortunately, some of those myths — such as carrying a balance — can harm Florida consumers more than anything else. For some it might even be a contributing factor to financial distress, which is often best addressed through bankruptcy proceedings.