What’s the worst credit advice you’ve heard?
The majority of us get inundated with advice on the daily, and we bet you’ve received plenty when it comes to your credit. Just how much of it ranks as the worst credit advice?
To help answer that question, we reached out to a group of 30-somethings who had some pretty wild responses. Suffice it to say: if you’re looking to improve your credit, try to steer clear of this bad credit advice.
1. Never pay anything on credit — only use cash. For everything. All the time. Period.
“If you’re someone who blows through cash quickly, keeping it in your wallet at all times is risky. Cash is bulky, it can take too long to sort through when you’re making a purchase and it’s easily stolen. Cash is good to have on hand if you come across a group of Girl Scouts selling cookies (because who can resist a box of Thin Mints?) but I don’t agree about using it for absolutely everything. You definitely can’t do your online shopping or build up your credit score with cash.”
2. Max out your credit cards to prove you can pay the balance off.
“I originally thought this was solid advice. I remember always being home on time for curfew when I was a kid, and because I built trust with my parents, they extended my curfew by 30 minutes. I thought that this would work the same way with credit card companies. But I learned that using all of your credit limit every month can actually hurt your credit score and bring it down 10 to 30 points.”
3. Open multiple credit cards if you carry debt because the revolving credit available will be high.
“This just sounds like a bad idea in the first place. I can’t remember who was responsible for giving me this piece of bad credit advice, but I do know that you shouldn’t follow it and I can give you two reasons why.
- If you open several cards at once, your credit score can drop. Every time you apply for credit, the lender will check to see if you are credit worthy and a hard inquiry will be generated on your credit report. If you already have a bad credit score, these points can hurt.
- The higher your credit limit, the more spending you can do and the more that you spend, the more debt you’ll have if you’re unable to pay it off.”
4. Make home improvements on a credit card instead of taking out a home equity loan.
“I can think of at least 10 ways to pay for home renovations. Unless you’re making a very small renovation or you’re only paying for materials in order to get credit card points, you won’t want to use your credit card. A home equity loan offers a much lower interest rate because it is backed by the equity of your home.”
5. Create a credit history by assuming credit card debt.
“The last thing I wanted to do was rack up credit card debt and not be able to pay it back. The easiest way for me to establish credit was to apply for a secured credit card, which works like a typical credit card but is secured by a deposit. You can’t spend more than what’s in the account, so your only responsibility is to make timely payments.”
6. If you max out your credit cards and can’t pay it back, go off the grid.
“This is quite possibly the worst piece of credit advice I’ve received to date and sounds like something straight out of a movie. Yes, max out your credit cards and go into hiding. Or better yet, max out your cards and leave the country.
Definitely do not max out your cards and run for it. The credit bureaus will still keep track of your credit score regardless of where you are.”
7. Open credit cards when as a college student just because someone offers them to you.
“I was young and naïve and got suckered into opening up credit cards at those tables outside of the UCF Student Union. I really regret not reading the fine print about having to pay annual fees and a 29% interest rate. Not only did I graduate college with student loans, but I also racked up some amazing credit card debt as well.
New DSLR camera – check.
New bed – check.
Spring break trip to Costa Rica – check.
My credit card bills were way too high for my tiny hostess salary.”
The best advice advice they received: “If you save more than you spend, you’ll always be rich.”