Three credit card myths that could be costing you money

(InvestigateTV) — A personal finance expert is debunking three common credit card myths that could be affecting your wallet and credit score.

Sara Rathner, a personal finance expert with NerdWallet, said the first myth is that you have to carry a small balance on your card from month to month to improve your credit score.

“What you’re doing in this instance is your needlessly paying interest on a balance that’s small enough that you might just be able to afford to pay it off entirely and not carry any credit card debt at all,” Rathner said. “And the thing is you can build and establish your credit in a really good way by paying all of your bills in full, on time every month.”

The second myth is that you just have one credit score, such as what you see in your banking app, Rathner said.

“That is one of many scores that you have,” Rathner said. “It’s a way to see generally where you are but it is not necessarily the same credit score that a lender is going to be using when they are evaluating a loan or a credit card application that you fill out.”

The third myth: once you’ve paid off a card you should close your account immediately. Rathner said while that can be a good move if it’s a card that’s been getting you in trouble because you keep using it, there are alternatives because closing a credit card account can affect your credit score.

She said it can knock you down a couple of points temporarily and adjust your total credit limit, which can affect the percentage of credit you are using and it can reduce the average age of your credit accounts.