Myth No. 1:

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Never using or not having any credit cards will improve your FICO score

It’s true that not having any credit cards might help control your spending, especially if the lure of too much available credit is too tempting to resist, but it will not help your score. What you need to keep in mind is that the FICO score of someone who has managed his credit responsibly is more likely to be higher than someone who has little or no credit history.

Buying everything with cash will surely save you from paying interest, but it is not an ideal thing to do in terms of building a good credit history.

How it can cause more damage:

Having too little credit history can lower your score, and if you don’t have any accounts that are older than 6 months, you might never get a score at all. They feel that the history is just not enough or too little to generate a score on. If you have a long history that is not so perfect and have made up your mind to get rid of all those cards, you are loosing on a chance to redeem yourself. FICO scores take into account the good and the bad, and if you generate more good, your score will improve.

Avoiding paying interest does not mean that you can’t build up a solid credit history. Use your credit cards in small amounts, and pay off the balance every month in full, and on time. This way, you succeed in building a favorable credit history and continue to enjoy a no-interest life.

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